An announcement from Wall Street yesterday afternoon has analysts watching keenly as two innovative companies move ahead with plans for a merger. Intuit (NASDAQ:INTU), a global technology platform with holdings in personal finance and small business bookkeeping, has made a move to expand into email marketing by acquiring Mailchimp, a leader in the field of digital communications. Specifically, investors should note that Mailchimp is a popular tool within the startup and small business communities. Intuit stock has reacted well to the news so far.
What Happened With Intuit Stock
As can be expected, this morning’s announcement sent Intuit stock onto a steady upward trajectory, rising 2.1% as of this writing. Prior to today, it had enjoyed a week of fairly stable growth. Yesterday, though, shares sank by as much as 3% before they began to climb again as markets opened today.
Wall Street seems to have high hopes for the newly merged companies, though. Siti Panigrahi of Mizuho Securities reiterated a “buy” rating for INTU stock yesterday with a price target of $640, a significant increase from the company’s current share price of $569.25.
According to Investing.com, “Panigrahi expects Intuit to post earnings per share (EPS) of $1.39 for the third quarter of 2021.”
What It Means
For Intuit, this merger marks a highly strategic acquisition, and certainly a logical step. As a global technology developer looking to establish a presence in the small business space, Mailchimp is a great addition to the Intuit portfolio, given its popularity with new and small business owners.
Mailchimp’s popularity stems from a highly user-friendly platform driven by an AI-driven technology stack that has allowed for maximum outreach and consumer engagement efforts. Intuit’s holdings in both tax and bookkeeping software, as well as its holdings in media, have enabled it to gain a strong foothold in the small and mid-market business communities. Business communications is one market that it had not yet tapped but this acquisition will enable Intuit to do exactly that.
What’s Next for Intuit Stock?
Panigrahi’s price target is ambitious, but it is well within the realm of possibility for Intuit to hit it. The acquisition of a powerful and highly profitable private company like Mailchimp will enable Intuit to expand in the exactly the type of market in which it seeks to, achieving the type of growth that it has seen throughout the previous year.
Intuit could easily be on its way to becoming a one-stop shop for small and mid-market business owners across many different sectors. It already allows for users to do their taxes and conduct all their bookkeeping needs. As of the end of this year, when the deal is expected to close, Intuit will hold the key to all the most important types of digital business communications.
For Intuit stock, the future looks bright for both companies and likewise, for investors.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
