12:28 PM EST, 11/22/2024 (MT Newswires) -- Intuit's (INTU) fiscal Q1 results were a "mixed bag" as revenue grew from Credit Karma and QuickBooks Online performance, but Online Services only met expectations as Mailchimp's growth slowed and payment volumes decreased, Morgan Stanley said in a note Friday.

The analysts said that the company's revenue for the quarter was up 10% year over year and 4% ahead of expectations as QuickBooks Online accelerated to 21% year over year, driven by "solid" customer growth and price increases.

However, the majority of that revenue beat came from Credit Karma, which grew 29% year over year. While this is positive, Credit Karma's high volatility and lower contribution margin may limit bullish sentiment.

Investors were more bullish on Online Services, but it only met expectations as Mailchimp faced higher churn and storms on the East Coast impacted payment volumes. The revenue upside led to a $41 million increase in operating income, but investors were surprised that the company used most of that gain, keeping operating margins in line with expectations.

Even more surprising was the Q2 guidance, which came in below consensus for both revenue and earnings, the analysts said.

Morgan Stanley raised its price target on Intuit to $730 from $685, while maintaining equalweight rating. Shares fell past 4% in recent trading activity.

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