Wall Street Analysts Think Intuit (INTU) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Intuit (INTU), and highlights the importance of using these recommendations in conjunction with other research tools like the Zacks Rank [1][4]. Group 1: Brokerage Recommendations - Intuit has an average brokerage recommendation (ABR) of 1.59, indicating a consensus between Strong Buy and Buy, based on 29 brokerage firms [2]. - Out of the 29 recommendations, 21 are Strong Buy and one is Buy, which accounts for 72.4% and 3.5% of all recommendations respectively [2]. - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies show brokerage recommendations often lack success in guiding investors towards stocks with significant price appreciation [4][5]. Group 2: Analyst Bias and Zacks Rank - Brokerage analysts tend to exhibit a strong positive bias due to their firms' vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [5][9]. - The Zacks Rank, which is based on earnings estimate revisions, is presented as a more reliable indicator of a stock's near-term price performance compared to the ABR [7][10]. - The Zacks Rank is timely and reflects changes in earnings estimates quickly, unlike the ABR, which may not always be up-to-date [11]. Group 3: Current Earnings Estimates for Intuit - The Zacks Consensus Estimate for Intuit's earnings for the current year remains unchanged at $19.27, suggesting steady analyst views on the company's earnings prospects [12]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for Intuit, indicating a cautious approach despite the Buy-equivalent ABR [13].