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Adobe Hit A New High, But Are Analysts Impressed?

Adobe Hit A New High, But Are Analysts Impressed?

Shares of Adobe Systems Incorporated (NASDAQ: ADBE) hit a new all-time high of $147.45 Wednesday after impressing investors with its earnings report. But are Wall Street analysts equally bullish on the company?

Credit Suisse: Continued Momentum

Adobe reported a strong earnings report in which revenue, margins, earnings per share and cash flow all came in ahead of expectations, Credit Suisse's Michael Nemeroff commented in a research report.

Perhaps more important, Adobe demonstrated yet another impressive performance in its Creative Cloud unit but also a "broad-based strength" in all segments, the analyst added. In addition, the company demonstrated continued average revenue per user growth, "healthy" net-new subscription adoption and strong retention across units.

Finally, the analyst's bullish stance is based on expectations for continued momentum in the highly profitable Creative Cloud business that will generate better-than-expected operating cash flows over the coming years.

Shares remain Outperform rated with a price target raised from $150 to $160.


Oppenheimer: 4 Key Positives

Oppenheimer's Brian Schwartz is most impressed with Adobe's business fundamentals, which generate a consistent sales execution. But there are four main positive takeaways from the report, including:

    1. A better-than-expected report across the financials, Digital Media, Digital Marketing, Print and Publishing, ARR, Digital Media ARR, and Creative ARR units.
    2. A record operating cash flow of $645 million, which came in $83 million above consensus estimates.
    3. Operating margin of 37.2 percent was 270 basis points better than expected.
    4. Management maintained a strong tone across all products and regions.

However, the bullish case for Adobe is already "well understood" by the Street. As such, shares remain Perform rated with no assigned price target.


BMO: Conservative Guidance

Adobe's management team guided its August quarter to $1.815 billion, which represents a 2.5 percent sequential growth, BMO Capital Markets' Keith Bachman stated in a research report. By comparison, Adobe recorded a 4.8-percent sequential growth in the two previous August-ending quarters, which may indicate the current guidance is conservative.

Adobe's management also guided its full year fiscal 2017 revenue to grow 23 percent year over year, which implies a 6.5-percent sequential growth for the November quarter. Similarly, this represents a slowdown to a 9.9- and 7.3-percent sequential growth in the prior two fiscal years, which also implies the full-year guidance may be conservative and has room for upside.

Shares remain Outperform rated with a price target boosted from $160 to $165.


Deutsche Bank: Clean Quarter

Adobe's earnings report was "clean" with "not much to quibble about," Deutsche Bank's Nandan Amladi commented in a research report.

In fact, Adobe's report contained encouraging data sets across the board, including a "fairly complete suite" in Creative and Marketing, which helped boost ARPU growth. Also, Stock's trajectory accelerated in the quarter due to new content while single-app downloads within the Video suite rose 49 percent year over year. A new Scan mobile app also saw 750,000 downloads.

Adobe's report appears to be consistent with a "healthy demand environment," especially in the Experience Cloud segment.

Shares remain Buy rated with a price target boosted from $140 to $160.

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Image Credit: By Johann H. Addicks - - Self-photographed, GFDL 1.2, via Wikimedia Commons

Posted-In: Analyst Color Earnings Long Ideas News Price Target Reiteration Analyst Ratings Tech Best of Benzinga


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