Los Angeles, US – As the stock market continues to flirt with record highs, investors are advised to tread carefully when it comes to high-valuation stocks that are fragile in the face of negative interest rate policies or macroeconomic news. For many, the strategy is shifting towards diversifying portfolios away from high-quality growth stocks and towards a mix of cash and “growth at a reasonable price” options.

One such company that some believe is ripe for a correction is Intuit (NASDAQ: INTU). Known for its popular tax filing software TurboTax, Intuit has seen its stock price surge over 40% in the past year, with a 10% increase year to date. However, concerns linger about the sustainability of this growth and the company’s ability to defend its current valuation.

One of Intuit’s main drivers of growth is its TurboTax Live offering, which has seen significant traction in recent times. The service allows customers to have live web consultation sessions with TurboTax professionals, moving them from DIY filers to the assisted group. While this has boosted revenue in the consumer group, questions remain about its long-term impact on the company’s bottom line.

Despite the success of TurboTax Live, some analysts point out that the offering has reached its peak for the current tax season. With no major catalysts on the horizon and the challenge of extreme seasonality, where a large portion of revenue is generated in Q3, Intuit faces an uphill battle to maintain its high multiples and growth trajectory.

Additionally, Intuit’s emphasis on the Small Business segment, particularly Quickbooks, has driven revenue growth but also raises concerns about retention rates and the company’s exposure to churn. This, coupled with contracting operating margins, paints a mixed picture of Intuit’s profitability and sustainability in the long run.

From a valuation standpoint, Intuit’s current market cap and enterprise value ratios raise eyebrows among investors. With revenue multiples that seem unjustified given the company’s growth rates, many question whether Intuit’s stock price reflects its true value.

As Intuit navigates these challenges, investors are urged to proceed with caution. The company’s reliance on TurboTax Live and the seasonal nature of its business suggest that a correction may be on the horizon. With uncertainties looming, it remains to be seen how Intuit will weather the storm and maintain its position in the market.