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Adobe Systems Shares Edge Higher Ahead Of Q3 Earnings Report

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Shares of Adobe Systems Incorporated (NASDAQ: ADBE) are in positive territory ahead of its Q3 numbers, expected after the bell.

In the previous four quarters, Adobe’s earnings have topped Street view in the range of 3.30 percent to 8.20 percent.

Wall Street consensus estimate calls for 33 percent rise in EPS to $0.72 on revenue of $1.45 billion, which is an increase of 19 percent from last year. The company guided to a revenue range of $1.420-$1.470 billion (+17-21 percent year-over-year) and non-GAAP EPS of $0.69-$0.75.

Similar to the past quarters, investors would focus on digital media ARR and the full year guidance.

Following are the thoughts of various brokerages ahead of Adobe’s earnings.

Morgan Stanley

Morgan Stanley, which expects an in-line third quarter, looks for total quarterly revenue of $1.445 billion, slightly below consensus at $1.449 billion. The brokerage projects $0.69 EPS for the quarter, which is below consensus at $0.72.

Analyst Keith Weiss sees digital media revenue to rise 26.7 percent to $975.3 million, with ARR projected at $3.7 billion.

“Our partner conversations pointed to sustained CC sales and renewals, helped by Acrobat subs and healthy Education activity. Roll-off of promo pricing and focus on ETLAs could provide upside in 2H and FY17. However, with consensus at or ahead of FY16 guide, we see a balanced risk/reward,” Weiss wrote in a note.

Morgan Stanley maintained its Equal-weight rating and $100 target price.

Citigroup

Citigroup’s Walter Pritchard has a Buy rating with a $117 price target, saying Adobe’s third quarter results would show consistent growth in Digital Media “with improving confidence around convergence of revenue with bookings in Digital Marketing, perhaps with notion that spending could be higher.”

Pritchard sees an in-line EPS of $0.72, with upward bias to estimates. The analyst, however, models fourth quarter EPS of $0.86 above Street’s $0.78.

“We note no noticeable discounting in Q3 and consistent inputs from volume resellers on channel-based subscriptions, which we believe bodes well for Digital Media ARR. In Digital Marketing, market demand remains robust and Adobe continues to be short-listed on more strategic deals based on SI input,” the analyst continued.

Credit Suisse

Michael Nemeroff of Credit Suisse reiterated his Neutral rating and $105 price target as he feels the risk/reward on the stock is currently balanced. The analyst sees EPS of $0.72, in line with Street.

Credit Suisse expects third quarter total revenue in line to above CS/Street estimates of $1.461 billion/$1.449 billion and near the high-end of prior guidance $1.420-$1.470 billion.

The brokerage sees digital media revenue to grow 29.4 percent to $995.9 million and digital media ARR to rise 39.8 percent to $3.698 billion.

Goldman Sachs

Goldman Sachs also reiterated its Neutral rating with a $104 price target as it sees fewer catalysts in the near-term.

Analyst Heather Bellini sees non-GAAP EPS of $0.71 on revenue of $1.427 billion. Bellini projects digital media revenue to grow 26 percent to $970 million, with digital media ARR to increase by $285 million to $3.70 billion. This in line with guidance and compared to $90 million added in the year ago period.

For the fourth quarter, the analyst currently forecast revenue of $1.59 billion, versus consensus of $1.58 billion. The non-GAAP EPS estimate of $0.80 is above the Street at $0.78.

Latest Ratings for ADBE

DateFirmActionFromTo
Nov 2016BTIG ResearchInitiates Coverage OnNeutral
Sep 2016Argus ResearchMaintainsBuy
Sep 2016Pacific CrestMaintainsOverweight

View More Analyst Ratings for ADBE
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Posted-In: Analyst Color Earnings News Guidance Price Target Previews Reiteration Analyst Ratings

 

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