Intuit (INTU) reported a good end to the fiscal year with continued momentum for its small business online ecosystem. QuickBooks Online subscriber growth was healthy with the firm finishing the year with 1.5 million paid subscribers, helping support the company’s cloud-based vision and international growth aspirations. Online product adoption remains a key component behind Intuit’s long-term growth and we think the firm has performed well in transitioning existing and attracting new customers to the online ecosystem. Intuit’s 2017 QuickBooks Online paid subscriber projection of 2-2.2 million supports this notion. On the consumer tax side, Intuit had a solid year, outperforming our expectations as product innovation (namely ease of use) and better go-to-market improved consumer product adoption. Despite a good year, Intuit’s fiscal 2017 guidance was a slight disappointment with the company forecasting a more modest Consumer Tax growth rate in addition to revenue declines for the Consumer Ecosystem Group and ProConnect Group.

We maintain our wide economic moat rating for Intuit. We will also raise our fair value estimate to $98 from $90 but still think the firm is trading at a premium and would await a moderate pullback before committing capital to the name.

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