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Wall Street Weighs In On Adobe's Mixed Earnings Report

Wall Street Weighs In On Adobe's Mixed Earnings Report
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Adobe Systems Incorporated (NASDAQ: ADBE) shares dipped more than 3 percent Wednesday after the company’s third quarter earnings report disappointed the market.

A number of Wall Street analysts weighed in on Adobe following the report. Here’s a rundown of what they had to say.

Questions Remain

JPM Securities analyst Patrick Walravens said Adobe’s sell-off has little to do with its earnings and revenue beats and more to do with management commentary from the earnings call.

“We believe the shares traded down...because Adobe commented on the call that it failed to achieve its F3Q17 bookings target for the Adobe Experience Cloud and, consequently, would no longer achieve its full-year goal of 30% bookings growth for the Adobe Marketing Cloud,” Walravens wrote.

BMO Capital Markets analyst Keith Bachman said questions surrounding the company’s guidance will likely continue to weigh on the stock.

“While last year's quarter Marketing results were impacted/helped by a meaningful amount of perpetual revenue, we nevertheless believe that the guide for Experience Cloud revenues of 17% y/y in total suggest below 10% y/y net of TubeMogul (organic),” Bachman wrote.

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Staying Positive

KeyBanc analyst Brent Bracelin said Adobe’s impressive 41 percent free cash flow growth outweighs the bookings disappointment.

“Buy ADBE on weakness as FCF should exceed $8.00 per share within two years, in our view,” Bracelin wrote.

Canaccord Genuity analyst Richard Davis said investors should appreciate the post-earnings dip.

“Our positive view while ever so slightly jarred, remains intact that this stock has another significant up-leg coming as the firm evolves to become a strategic partner for all things digital marketing,” Davis wrote.

Jefferies analyst Brent Thill said the Adobe engine is running as fast as ever, despite a one-cylinder misfire.

“We see this as a small speed bump due to ADBE's growing enterprise deal sizes, with core Creative revs more than offsetting the slower rev pace in Digital Marketing,” Thrill wrote.

Baird analyst Rob Oliver said all of Adobe’s key metrics on the quarter came out ahead of consensus expectations.

“[The] Stock traded off 3% after-hours, though we struggle to see any change in fundamental nature of Adobe’s business,” Oliver wrote.

Stifel analyst Tom Roderick said investors should choose to view the Adobe quarter as the glass being half full rather than half empty.

“With a Digital Media segment growing over 30% in ARR at nearly $5bn scale, unmatched profitability compared to peers, and a leadership position in key markets, we are buyers on any near-term weakness in Adobe shares,” Roderick wrote.

Ratings And Price Targets

Wall Street is still mostly bullish on Adobe stock, despite the initial market reaction to the report. Some firms are more bullish than others:

  • JMP Securities has a Market Outperform rating and $157 target.
  • BMO has an Outperform rating and $165 target.
  • KeyBanc has an Overweight rating and $174 target.
  • Canaccord has a Buy rating and $170 target.
  • Jefferies has a Buy rating and $180 target.
  • Baird has an Outperform rating and $160 target.
  • Stifel has a Buy rating and $163 target.

Image: Coolcaesar at the English language Wikipedia [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

Latest Ratings for ADBE

Sep 2018ArgusMaintainsBuyBuy
Sep 2018Bank of AmericaMaintainsBuyBuy
Sep 2018BairdMaintainsOutperformOutperform

View More Analyst Ratings for ADBE
View the Latest Analyst Ratings

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