Positive Outlook for Adobe (ADBE) as Analyst Maintains Buy Rating

By Don Francis, Editor
September 16, 2023 12:53 PM UTC
Positive Outlook for Adobe (ADBE) as Analyst Maintains Buy Rating

BMO Capital's Keith Bachman raised their price target on Adobe (NASDAQ: ADBE) by 0.8% from $640 to $645 on 2023/09/15. The analyst maintained their Buy rating on the stock.

Bachman called Adobe's Q3 2023 earnings beat and Q4 guide, reported on 2023/09/14, "solid," even if the results did not quite meet expectations that were higher heading into the print.

Management's ARR (Annual Recurring Revenue) guidance for Q4 "seems conservative," the analyst acknowledged. However, Bachman argued that "investors should consider that the company has a multi-year meaningful generative AI opportunity, driven by new solution enhancements beyond the four announced solutions, including in areas such as Document Cloud."

Adobe's "incremental user growth, incremental price opportunities, and usage/consumption growth" were all positives as well, the analyst noted.

For Q3 2023, Adobe reported EPS of $4.09, which beat the Zacks Consensus Estimate of $3.97 and, by 20.3%, Q3 2022’s $3.40. Additionally, revenues of $4.89B were roughly in line with the Zacks Consensus Estimate and beat Q3 2022’s $4.43B by 10.4%.

Looking ahead to Q4 2023, management guided for EPS of $4.10 to $4.15 and revenue of $4.98B to $5.03B.

CEO Shantanu Narayen commented, “We are unleashing a new era of AI-enhanced creativity around the world with innovations across our product portfolio. The recent launches of Firefly, Express, Creative Cloud, and GenStudio make Adobe magic available to millions of users.”

In regards to other analysts updating their ratings on September 15, 2023: - Citigroup's Tyler Radke raised their price target by 7%, from $570 and maintained their Hold rating on the stock. - Baird's Rob Oliver raised their price target by 8%, from $500 and maintained their Hold rating on the stock. - Barclays's Saket Kalia raised their price target by 3.2%, from $620 and maintained their Hold rating on the stock.

According to available data, 66.7% of top-rated analysts currently rate ADBE as a Strong Buy or Buy, 33.3% see it as a Hold, and no analysts either recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that ADBE's upcoming year will deliver earnings per share (EPS) of $12.87. If the analysts are right, ADBE's next yearly EPS will be up by 22.5% on a year-over-year basis.

Since ADBE's latest quarterly report on 2023/09/14, the stock price is down 4.2%. Year-over-year, the stock is up 71.1%. During that period, ADBE is outpacing the S&P 500, which is up 14.1%.

BMO Capital analyst Keith Bachman is ranked by WallStreetZen in the top 4% out of 4,329 Wall Street analysts, with an average return of 7% and a 59.1% win rate. They specialize in the Consumer Cyclical, Consumer Defensive, and Technology sectors.

Adobe Inc. operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, workers, marketers, educators, enthusiasts, communicators, and consumers. The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings. The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.

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