Intuit (INTU) shares are likely to remain under pressure in the near term despite the company's strong competitive moat, as it will take time for investors to gain confidence in revenue acceleration, Morgan Stanley said in a note Tuesday.

The primary investor debate centers around the viability of the TurboTax business, with concerns about AI disruption unlikely to be dispelled until fiscal Q3 results in May 2027.

The brokerage said it sees risk around Intuit's upcoming fiscal Q4 results and the fiscal 2027 guidance. If management guides TurboTax in line with or above the Street's 6% consensus estimate, Morgan Stanley believes the market will view the guidance as aggressive and see downside risk due to perceived structural AI risks in tax.

Intuit's accounting solutions should remain resilient against competition from large language models, benefiting from decades of proprietary data and context, according to the note.

Morgan Stanley downgraded Intuit stock to equal weight from overweight and lowered its price target to $335 from $580.

Price: 294.13, Change: +0.31, Percent Change: +0.11