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Citi Sees Adobe Numbers Continuing Higher

Citi Sees Adobe Numbers Continuing Higher
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Following the Q3 beat reported by Adobe Systems Incorporated (NASDAQ: ADBE) across almost all metrics, Citi’s Walter H. Pritchard sees the Street expectations moving up.

Pritchard maintains a Buy rating on the company with a price target of $117.

Q3 Upside

Adobe Systems reported its Q3 revenue at $1.46 billion, ahead of the estimate and the consensus, driven by upside in digital media and digital marketing

Digital Media ARR grew ahead of expectations, by $285 million, with incremental ARR continuing to track in line with the FY15 levels.

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“Digital Marketing annualized bookings growth was not quantified, but grew fast enough to support raise in revenue for FY16 with strong comments on pipeline conversion,” the analyst mentioned.

Strength in subscription revenue for both digital marketing and digital media was supported by robust deferred revenue growth and implied billings growth of 22 percent.

The company reported its EPS for the quarter at $0.75, ahead of the estimate and the consensus, with Adobe Systems spending in line with the estimate.

Looking Ahead

“We see three important areas of focus going into FY17 including 1) trajectory of incremental Digital Media ARR in FY17 2) ability to continue to grow with or ahead of digital marketing sector and 3) level of incremental spending required to support this,” Pritchard stated.

In Wednesday's pre-market session, Adobe was seen up 4.9 percent at $105.55.

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Latest Ratings for ADBE

May 2017BarclaysInitiates Coverage OnOverweight
Apr 2017GuggenheimInitiates Coverage OnBuy
Apr 2017Stifel NicolausInitiates Coverage OnBuy

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