Morgan Stanley Expects Adobe Systems To Report Strong Q4 But 2015 Guidance A Main Focus

Adobe Systems ADBE will reported its fourth quarter results on Thursday after market close. Jennifer Swanson Lowe of Morgan Stanley stated in a note on Tuesday that the company should report another strong quarter of subscriber additions with 512,000 subscriber adds which will slightly exceed one million adds in the back end of 2015. “Our fieldwork suggests that channel business improved in Q4 after a mixed Q3,” Swanson Lowe wrote. “Partners noted end of quarter discounting and a push for ETLAs as some of the key drivers, with early renewal activity running at our above 100 percent, as customers migrate additional seats to CC.” Swanson Lowe notes that investors should focus on the company's fiscal 2015 guidance which is a “bigger source of debate.” The analyst adds that management previously stated its full year fiscal 2015 earnings per share should be around $2 and that management should maintain the guidance. However, the analysts note that “the bigger question” will be ARR and subscriber guidance. Swanson Lowe expects the company to project 5.08 million subscribers the end of fiscal 2015 although there is a risk of subscriber adds decelerating in fiscal 2015 as the transition starts to mature. Swanson Lowe expects Adobe Systems to earn $0.13 per share in the quarter on revenue of $1.068 billion. Shares are Equal-weight rated with a $70 price target.