Intuit drops 20% as Stifel downgrades, fraud probe launched

Intuit shares plunged 20% this week after Stifel downgraded the stock to Hold from Buy and Bleichmar Fonti & Auld LLP announced a securities fraud investigation into pricing issues at the TurboTax maker.

"We expect management to lower its near and medium-term guidance," a Stifel analyst said, cutting the price target to $275 from $375. The new target implies roughly 3% upside from the current price of $267, down from a prior implied upside of about 40%.

The stock closed at $267.00 on Thursday, down 0.77% on the session and roughly 20% below its level before the selloff began. Intuit's market capitalization now stands at $73 billion, with a forward price-to-earnings ratio of 11.2. The company's revenue grew 15% year over year in its most recent fiscal period.

BFA Law announced the investigation on June 19, saying it is probing potential securities fraud related to the pricing issues that triggered the decline. The law firm is seeking investors who held Intuit shares to come forward. The investigation adds legal risk to an already pressured stock, which has lost roughly $18 billion in market value during the selloff.

The downgrade and investigation put Intuit at its lowest valuation in years, testing support near the $260 level. Investors will watch for any formal guidance update from management and the next quarterly earnings report for clarity on the pricing issues and their financial impact.

This article is for informational purposes only and does not constitute investment advice.