Intuit's stock saw a notable rise of about 5.5% on Monday, reaching $289.76 by Tuesday, despite the backdrop of a new class action lawsuit. This legal action targets investors who acquired shares from August 22, 2025, to May 20, 2026, claiming that the company provided misleading information regarding the growth of TurboTax.
The market reaction has been surprisingly calm, as the underlying issues appear to have already been factored into the stock's price following a significant 20% decrease back in May when the company disclosed disappointing TurboTax growth and a workforce reduction of 17%. Investors had likely already braced for this news, which can explain the lack of panic in the markets.
Buyback Plans and Investor Sentiment
A major factor supporting investor confidence is Intuit's substantial buyback plan. In May, the company unveiled an $8 billion stock repurchase initiative, contributing to an overall buyback authorization of $22.5 billion. Management's willingness to support the stock in this manner signals a belief that it is undervalued at the moment. Furthermore, Intuit reported encouraging Q3 results, with earnings per share (EPS) at $12.80, surpassing the consensus estimate of $12.57, and revenues hitting $8.56 billion, marking a 10.4% increase year-over-year. Looking ahead, the company has provided a Q4 EPS guidance range of $3.56 to $3.62.
Legal Risks and Institutional Support
While Intuit faces increasing legal scrutiny, including a previous Federal Trade Commission case regarding its "free" tax-filing advertisements, institutional investors remain undeterred. For instance, AMG National Trust Bank increased its holdings of INTU shares by an astonishing 956.5% in the first quarter. Currently, hedge funds and institutional investors own approximately 83.66% of Intuit’s shares. Notably, director Vasant Prabhu made an insider purchase of 1,250 shares at $309.45 each on May 22, indicating confidence in the company's future.
With a 52-week price range from $252.84 to $813.70 and a current trading level far below the 200-day moving average of $415.61, Wall Street analysts maintain a Moderate Buy consensus, based on 22 Buy ratings, seven Holds, and two Sell recommendations. This consensus reflects a careful optimism as the company navigates its current challenges.
This material is for informational purposes only and should not be considered financial advice.
