Market Overview

Why Adobe's CFO Transition Is No Reason To Fret

Why Adobe's CFO Transition Is No Reason To Fret
Related ADBE
Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolio
After Basking In The Glow Of Netflix Results And Tuesday Rally, Pressure Seems Possible
Trend Trading Introduction (TalkMarkets)

Adobe Systems Incorporated (NASDAQ: ADBE) shares peaked as much as 6.4 percent after hours Monday on positive guidance and news of the CFO’s retirement.

One analyst firm thinks the market’s underreacting.

The Analyst

Canaccord Genuity analysts Richard Davis and David Hynes reiterated a Buy rating on Adobe and increased their price target from $195 to $220.

The Thesis

Davis and Hynes consider Adobe impervious to announced management transitions considering its business momentum and scale. At the same time, current CFO Mark Garrett intends to stay on until the firm appoints a successor, whom Canaccord expects to be “the pick of the litter” for such a “plum position.”

“While we do not expect the transition will be materially disruptive, we would be remiss if we did not note CFO Garrett's accomplishments, which include architecting a model transition that took recurring revenue from 5 percent of total to 85 percent-plus today, as well as the integration of several important acquisitions, including Omniture, Day Software and Tube Mogul,” the analysts said in a note.

Meanwhile, Adobe is also seen to receive a boost in earnings per share and free cash flow from a decreased tax rate.

While the stock price already accounts for some of the factors, Canaccord anticipates continued thrusts higher.

“Perhaps like Spinal Tap’s amplifiers that ‘go to 11,’ this news inches us up from an already quite bullish ‘10,’” Davis and Hynes said.

Price Action

At time of publication, Adobe was trading up 1.3 percent at $200.44.

Related Links:

KeyBanc Raises Price Target On Adobe By 20%, Cites Cloud, AI

Adobe Likely Has More Earnings Upside In Its Future

Latest Ratings for ADBE

Nov 2018NomuraInitiates Coverage OnBuy
Oct 2018WedbushInitiates Coverage OnNeutral
Oct 2018BarclaysMaintainsOverweightOverweight

View More Analyst Ratings for ADBE
View the Latest Analyst Ratings

Posted-In: Analyst Color News Guidance Price Target Reiteration Management Top Stories Analyst Ratings Best of Benzinga


Related Articles (ADBE)

View Comments and Join the Discussion!

Latest Ratings

CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analyst: Palo Alto Now Has Better Opportunity To Outperform

Fintech Entrepreneur Joy Schoffler Turns To Multi-Family Real Estate Investment For The Retail Investor