Decision time as Intuit eyes a break below key support and 200-MA

Despite crashing 42.23% year-to-date, Intuit Inc. (NASDAQ:INTU) can go lower further. The stock seemed to have found a bottom at the $370 oversold level, jumping to a high of $425 later.

However, the stock’s bearish pressure is on. At the current $364, the stock has lost the monthly gains. It is now trading at the support level again and looking increasingly bearish. 

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Intuit’s fundamentals remain strong despite the bearish pressure. Q3 2022 revenue of $5.63 billion was better than estimates of $5.51 billion. The earnings per share of $7.65 were also better than estimates of $7.58. Both revenues and earnings increased compared to last year.

For FY22, the company projects an EPS of between $11.68 to $11.74. The revenue is expected at between $12.63 billion to $12.67 billion. The EPS is higher than prior guidance of between $11.48 and $11.64. The revenue also exceeds prior guidance of between $12.17 billion to $12.3 billion.

This thesis finds that Intuit suffers from sector weakness, but the fundamentals remain robust. High inflation has sparked fears of a faster Fed action that will hit tech stocks. Intuit is suffering from this market expectation, with a further drop in price likely. Investors could also be taking profits after the stock climbed to above $700 at the end of last year.

Intuit stock trades at key support amid bearish pressure

Technically, Intuit is bearish at key support. The stock is about to break below the 200-day moving average. If a break below happens, the stock could decline further up to the next potential support at $290. We recommend a sell at the current level.

Summary

Intuit remains fundamentally strong. However, technical indicators point to a further decline. The stock could find support at $290.

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