Intuit (INTU) is poised for "positive revisions near term" for earnings after fiscal Q2 results topped estimates by analysts, Morgan Stanley said Wednesday in a report.

Strength in the small business segment and Credit Karma drove revenue above estimates in Q2, and management maintained "conservative" full-year targets for sales and earnings, Morgan Stanley said.

Notable margin expansion was driven by investments in generative artificial intelligence that generated $90 million in annualized efficiencies within the customer success organization and enabled up to 40% faster coding, the report said.

QuickBooks Online offerings and Credit Karma performance signaled operational momentum, and revenue from upmarket solutions such as QBO Advanced and the Intuit Enterprise Suite jumped 40%, supported by improvement in sales productivity, the report said.

Morgan Stanley upgraded its rating on Intuit stock to overweight from equal-weight on "increased conviction in the potential for positive EPS revisions." The price target held at $730.

Intuit shares jumped 13% in recent Wednesday trading.

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