5 Best Technology Stocks to Buy According to Billionaire Dan Loeb

2. Intuit Inc. (NASDAQ:INTU)

Third Point LLC’s Stake Value: $593,461,000

Percentage of Third Point LLC’s 13F Portfolio: 3.23%

Intuit Inc. (NASDAQ:INTU) provides important software related to accounting, finance, taxes,  and customer relationship management. The company is catering to 100 million consumers and small businesses worldwide through its 14,200 employees spread across nine countries. Following the acquisition of Mailchimp in November 2021, Intuit Inc.’s (NASDAQ:INTU) software portfolio comprises some of the notable platforms like Credit Karma, Mint, QuickBooks, and TurboTax under its umbrella.

On November 19, Kash Rangan at Goldman Sachs upgraded Intuit from a Neutral to a Buy rating, while increasing the target price from $535 to $840.  The analyst anticipates Intuit Inc. (NASDAQ:INTU) to reach $17 billion in revenue by FY24 with an operating margin of 38% to 40%. This is similar to the topline and operating margins of Adobe Inc. (NASDAQ:ADBE) in FY21, which is trading at 1.8 times the market capitalization of Intuit. The analyst observes a strong execution plan at Intuit Inc. (NASDAQ:INTU) in achieving long-term growth.

In its Q3 2021 investor letter, Cooper Investments shared its views on Intuit Inc. (NASDAQ:INTU). Here’s what the fund said:

“The other meaningful deal during the quarter was Intuit’s acquisition of Mailchimp for $12bn. Intuit has reinvented itself over the last decade and thrived with a leadership position in QuickBooks Online, the financial accounting software for small businesses (effectively the ‘Xero of the US’). We originally invested in Intuit in February 2020, excited by the QuickBooks prospects.

Management have executed exceptionally well on the opportunity set which has seen the shares double since our initial purchase. However, the company has now conducted two meaningful deals in Mailchimp and Credit Karma worth a combined US$20bn over the last 12 months. The investment proposition has shifted from a focus on QuickBooks to now being a financial and small business software conglomerate. We continue to very much admire the company, but with Intuit now trading on 50x forward earnings we no longer see such attractive latency on offer, nor the rewards for the level of execution risk and thus we have exited the position.”