'That Made Me Look Closer': Why This Adobe Investor Is Cautious Ahead Of Q2 Earnings

Zinger Key Points
  • Decatur Capital Management's Degas Wright is cautious on Adobe and trimmed his exposure ahead of earnings.
  • "I was really concerned because the analysts started to downgrade the stock," he said.

Adobe Inc ADBE is set to announce its quarterly results after the bell Thursday, and one investor sees warning signs ahead of the report.

What To Know: Decatur Capital Management's Degas Wright said he trimmed his exposure to Adobe and warned he is cautious on the stock ahead of the company's results after seeing DocuSign Inc DOCU tumble on earnings last week.

"That made me look closer at Adobe because they have a similar e-signature product," Wright said Thursday on CNBC's "Fast Money Halftime Report."

As he took a closer look, Degas said he found that Adobe seems to be better positioned because it's profitable and has a more diverse product lineup than DocuSign. Yet he noticed that analysts seem to be preparing for a selloff.

"I was really concerned because the analysts started to downgrade the stock," he said.  

On Tuesday, RBC Capital analyst Matthew Hedberg maintained Adobe with an Outperform rating, but lowered the price target from $600 to $500. Citigroup analyst Tyler Radke lowered his price target from $455 to $425 and BMO Capital analyst Keith Bachman lowered his price target from $535 to $450.

Related Link: BMO Capital Maintains Outperform Rating for Adobe: Here's What You Need To Know

"So what I did is I backed off. I'm more market weighted now in Adobe," Wright said.

Adobe is scheduled to report its fiscal second-quarter financial results after the market closes Thursday. Analysts expect the company to earn $3.31 per share on revenue of $4.34 billion, according to data from Benzinga Pro.

ADBE Price Action: Adobe has a 52-week high of $699.54 and a 52-week low of $363.12.

The stock was down 4.16% at $361.23 in afternoon trading. 

Photo: Mitchell Haindfield from Flickr.

Posted In: CNBCDegas WrightEarningsNewsPreviewsMediaTrading Ideas

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