Adobe's Stock Climbs in Early Trading (ADBE)

Broadpoint analysts are maintaining their Neutral rating on Adobe Systems Inc. (NASDAQ: ADBE) based on a projected successful Creative Suite 5 release this quarter being slightly overshadowed by greater business variability in the near-term. ADBE reported solid F1Q results that exceeded our and consensus estimates and guidance. It issued strong F2Q guidance, driven by its expectation for a highly successful CS5 launch in the quarter.

Adobe’s Acrobat business showed positive y/y growth of 11% in the quarter after posting four consecutive y/y declines. The enterprise and Omniture business also did well from an extra week in the quarter and posted solid results.

While Broadpoint is expecting ADBE shares to rally today from stronger than expected F2Q guidance driven by the CS5 release, they believe any further upside will be limited pending clear signs of initial strong sales. Even then, some investors may begin to raise concerns regarding the strength of CS5 sales towards the end of the cycle (2H of FY11). Shares have limited upside potential after today's expected rally.

Shares of ADBE are already up 4.6% in the first half hour of trading today. It’s current price of $36.84 is propelling the stock closer to it’s 52-week peak of $38.20 reached in January.