Success Stories With Facebook, T-Mobile And Others Keep Adobe Stock A Core Holding

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Shares of Adobe Systems Incorporated ADBE hit a new all-time high just shy of $130 after the company's fiscal first quarter report came in better than expected.

Brent Bracelin of Pacific Crest maintained an Overweight rating with a price target boosted to $142 from $122.

Bracelin highlighted Adobe's results in which revenue rose 21.6 percent year-over-year to $1.68 billion and was driven by a 29 percent subscription growth which now accounts for 82 percent of total sales. The analyst added that Adobe's strength was also broad-based, including a 28 percent growth in Creative Cloud but the "bigger surprise" in the quarter was Adobe's 43 percent boost in net profits which was driven by continued operating leverage.

Success Stories

Bracelin's price target boost was mostly due to Adobe's cloud and subscription momentum, which is expected to continue driving top-line growth and also deliver margin expansion in 2017.

The analyst noted Adobe's many "customer success stories" from companies including Facebook Inc FB, which Adobe is a badged Facebook Marketing Partner, with Ad Technology and Community Management specialties.

Another example of Adobe's "customer success" story comes from T-Mobile US Inc TMUS in which T-Mobile saves millions of dollars by using the Adobe Digital Enterprise Platform and Adobe Flash® Platform solutions to transform customer experiences.

The Bottom Line

Bottom line, the analyst argued Adobe is now a "juggernaut" within the creative market with a "dominant position." As such, the company could grow into a $10 billion revenue franchise within five years and the stock should be viewed as a core cloud holding among investors.

In fact, Bracelin isn't alone in his bullish view as analysts at Canaccord also labeled the stock as being the best large-cap name in its space.

See Also:

Adobe's Premium Valuation Is Warranted; Wunderlich Upgrades To Buy

Salesforce Remains A Favorite Among Cloud Stocks In 2017

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Posted In: Analyst ColorPrice TargetAnalyst RatingsMediaAdobeAdobe earningsBrent BracelincloudPacific Crest
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