Tax Stock Could Return Bigger Gains This Month

Intuit is also due to report earnings this month

by Karee Venema

Published on Feb 1, 2019 at 1:03 PM
Updated on Feb 1, 2019 at 1:20 PM

It was a rough final quarter of 2018 for Intuit Inc. (NASDAQ:INTU), with the stock falling to a seven-month low near $183 in late December from a record high of $231.84. Since then, the shares have rallied almost 18% to trade at $215.24, and history suggests more upside could be in store for the TurboTax parent.

Specifically, INTU stock has been one of the best stocks to own in February, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Since 2009, Intuit shares have averaged a gain of 5.3% in the second month of the year, with 90% of those returns positive. Another move of this magnitude would put the equity back near $226.68 by the end of the month.

intu daily chart feb 1

This time frame includes Intuit's fiscal second-quarter earnings report, tentatively scheduled for after the market closes on Thursday, Feb. 21. Over the last eight quarters, the equity has closed higher the day after earnings four times and lower the other four, averaging a move of 3.2%, regardless of direction.

In the options pits, short-term traders have rarely been more put-skewed toward Intuit than they are now. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.35 ranks in the 99th annual percentile. Drilling down, the April 175 and 180 puts are home to peak open interest among near-term contracts, with Trade-Alert indicating the bulk of positions were initiated in early January.

Meanwhile, unlike its sector peer H & R Block (HRB) -- who Goldman Sachs said to sell ahead of tax season -- analysts are mostly bullish toward Intuit. Eleven of 16 analysts maintain a "buy" or better rating on INTU stock. However, the average 12-month price target of $228.24 is a slim 6% premium to current trading levels, meaning the opportunity for price-target hikes exists.


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