President Donald Trump is set to unveil the Republican tax reform plan Wednesday afternoon. Experts expect the plan will include cutting the corporate tax rate to 20 percent, reducing the top individual tax rate to 35 percent and doubling the standard deduction for all Americans.
One company that may not benefit from a simplified tax code is Intuit Inc. INTU 0.92%. On Wednesday, Raymond James analyst Wayne Johnson downgraded Intuit from Market Perform to Underperform and said the company’s margins will likely erode over time in a challenging environment. The tax business accounts for more than half of Intuit’s total annual operating income.
According to Johnson, near-turn headwinds will offset the company’s expansion into international markets.
“While the company’s lower-priced service offering strategy for growing self-employed and international QBO subscribers is clearly working and should be a source of incremental cross-selling opportunity, we believe the mix-shift towards lower margin subscribers may continue over the next several years,” Johnson wrote.
To make matters worse, Intuit is facing difficult comps in the upcoming tax season. Johnson said he doesn’t expect the company to repeat this year’s price hikes once again.
After delivering 10 percent and 9 percent growth in its consumer tax business in fiscal 2016 and 2017, Johnson said…
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