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Adobe Systems Stock Hits New High On Q1 Beat And Raise

Adobe Systems ( ADBE ) stock jumped to an all-time high on Friday, a day after the company beat first-quarter views and raised its sales and earnings guidance for the year. Adobe shares leaped as much as 8.9% to a new high of 98 in early morning trading on the stock market today . By mid-morning trading, Adobe had trimmed the advance to about 5% to below 95. The digital media and marketing software firm late Thursday reported fiscal Q1 earnings per share of 66 cents, excluding items, on sales of $1.38 billion. Analysts polled by Thomson Reuters expected Adobe to report profit of 61 cents, ex items, on sales of $1.34 billion. On a year-over-year basis, non-GAAP EPS was up 50%, and revenue was up 25%. For its fiscal second quarter, Adobe is targeting EPS minus items of 67 cents on sales of $1.39 billion, based on the midpoint of guidance. Analysts were modeling 65 cents EPS minus items on sales of $1.39 billion. For the full year, Adobe now forecasts earnings of about $2.80 a share on a non-GAAP basis and sales of $5.8 billion. Investors are enthused about Adobe’s transition from desktop software to Internet cloud computing services. Adobe has three cloud computing businesses: Creative Cloud, Marketing Cloud and Document Cloud. The biggest is Creative Cloud, which includes software for creative professionals such as Photoshop, Illustrator and InDesign. Marketing Cloud provides online marketing and advertising services. Document Cloud leverages Adobe’s popular online document-sharing product Acrobat and its ubiquitous PDF format. UBS analyst Brent Thill reiterated his buy rating on Adobe stock but upped his price target to 114 from 105. Adobe is “reaping the fruit of a well-orchestrated playbook,” Thill said in a report. The company “is exiting the business model transition phase and entering the normalization phase.” Baird analyst Steven Ashley maintained his outperform rating on Adobe stock but raised his price target to 105 from 100. “Adobe continues to successfully broaden its market,” Ashley said in a report. “Over 30% of Creative Cloud customers are new to Adobe.” Adobe reported much-stronger-than-expected Creative Cloud subscriber growth of 798,000 new customers vs. the consensus forecast of 608,000 in fiscal Q1, which ended March 4. Pivotal Research Group analyst Brian Wieser maintained his buy rating on Adobe stock but bumped up his price target to 109 from 105. Adobe’s Q1 results “demonstrated ongoing growth from existing customers and market expansion from new ones,” Wieser said in a report. RBC Capital Markets analyst Ross MacMillan kept his outperform rating on Adobe stock, but he raised his price target to 104 from 101. “Valuation (is) the only question here, but with estimates moving up and higher recurring visibility, we remain (at) outperform,” he said in a report. Oppenheimer analyst Brian Schwartz reiterated his perform rating on Adobe stock. “We view Adobe as a well-established franchise,” Schwartz said in a report. “Our perform rating on ADBE is based solely on valuation, as we think it fairly prices in sustained strong growth and earnings power for the business” over the next 12 months. Credit Suisse analyst Philip Winslow maintained his neutral rating on Adobe but increased his price target to 85 from 70. “Although Creative Cloud has effectively increased annual revenue per user versus the prior perpetual licensing model, we believe much of this enthusiasm is captured in Adobe’s current valuation,” Winslow said in a report. “Therefore, we will monitor Adobe’s ability to (1) attract new users, (2) increase Creative Cloud pricing, (3) expand operating margins ahead of expectations, and (4) continue to expand into the digital marketing market before turning positive on Adobe’s stock.” Annualized recurring revenue in Adobe’s core Digital Media segment grew to $3.13 billion last quarter, an increase of $246 million. Adobe now expects to exit fiscal 2016 with Digital Media annualized recurring revenue of about $4 billion. That’s up from its prior target of $3.875 billion.

Adobe Systems Beats Q1 Views; Guides Q2 EPS Higher

Digital media software firm Adobe Systems ( ADBE ) late Thursday beat Wall Street’s targets for its fiscal 2016 first-quarter earnings and sales, as revenue growth accelerated for the third straight quarter. Adobe stock jumped as much 8.6% in after-hours trading Thursday, putting it in record high territory. During the regular session, Adobe rose 2% to 89.96. Adobe stock hit an all-time high of 96.42 on Dec. 17. Adobe earned 66 cents a share excluding items on sales of $1.38 billion for the quarter ended March 4. Analysts polled by Thomson Reuters expected Adobe to earn 61 cents ex items on sales of $1.34 billion. On a year-over-year basis, non-GAAP EPS was up 50% and revenue was up 25%. For the fiscal second quarter, Adobe expects revenue of $1.365 billion to $1.415 billion. It expects to report non-GAAP earnings per share of 64 to 70 cents. At the midpoint of guidance, Adobe is targeting EPS minus items of 67 cents on sales of $1.39 billion. For fiscal Q2, analysts were modeling earnings of 65 cents a share minus items, up 35%, on sales of $1.39 billion, up 20%. The San Jose, Calif.-based company also guided sales and earnings higher for the full year. Adobe expects to earn about $2.80 a share on a non-GAAP basis, up from its prior target of $2.70. Analysts polled by Thomson Reuters were modeling for $2.76 EPS excluding items for the full fiscal year. Adobe is forecasting full-year revenue of $5.8 billion, up from its prior target of $5.7 billion. “Every day, more brands, government agencies and educational institutions globally are choosing to base their digital strategies on Adobe’s content and data platforms,” Adobe CEO Shantanu Narayen said in a statement. “Our exceptional performance in Q1 is an indicator of the strong momentum we are seeing across our cloud businesses as we drive the experience economy.” Like Microsoft ( MSFT ), Adobe has earned the favor of investors through its transition from desktop software to Internet cloud computing services. Adobe has three cloud computing businesses: Creative Cloud, Marketing Cloud and Document Cloud. The biggest is Creative Cloud, which includes well-known products for creative professionals such as Photoshop, Illustrator and InDesign. Marketing Cloud provides online marketing and advertising services. Document Cloud leverages Adobe’s popular online document-sharing product Acrobat and its ubiquitous PDF format. “Adobe’s year is off to a strong start,” Narayen said on a conference call with analysts. “Adobe’s opportunity has never been greater … Our market leadership, product differentiation and continued momentum give us confidence to raise our FY16 revenue and earnings targets.” Adobe is through the rough part of its transition from a seller of licensed software to a provider of software-as-a-service. Over the last four quarters, year-over-year revenue growth has accelerated. Sales rose 9% in Q2 2015, 21% in Q3, 22% in Q4 and 25% last quarter. Earnings per share have grown in the double digits for six straight quarters, with average growth of 50%. Annualized recurring revenue in Adobe’s core Digital Media segment grew to $3.13 billion last quarter, an increase of $246 million. Adobe now expects to exit fiscal 2016 with Digital Media annualized recurring revenue of about $4 billion. That’s up from its prior target of $3.875 billion. Digital Media segment sales rose 33% year over year to $932 million in Q1. Digital Marketing segment sales rose 14% to $406 million. “Strong Cloud adoption drove record Creative and Marketing Cloud revenue in Q1, and better-than-expected Digital Media (annualized recurring revenue),” Adobe Chief Financial Officer Mark Garrett said in a statement. “Based on our strong Q1 results and business momentum, we are increasing our annual revenue and earnings targets for the year.” Under generally accepted accounting principles, Adobe’s earnings per share were 50 cents in fiscal Q1. Analysts were expecting 39 cents GAAP EPS. GAAP earnings include the impact of stock-based compensation. For its current fiscal Q2, Adobe is targeting GAAP EPS of 42 to 48 cents, or 45 cents at the midpoint. Wall Street had been modeling for 43 cents.

Adobe Systems Q1 Earnings Expectations Are Cloud High

Digital media software firm Adobe Systems ( ADBE ) is expected to keep the good times rolling when it reports fiscal first-quarter earnings after the market close Thursday. Analysts polled by Thomson Reuters predict that Adobe will post earnings per share of 61 cents excluding items on sales of $1.34 billion. It would translate to year-over-year growth of 39% in EPS and 21% in sales. For fiscal Q2, analysts are modeling earnings of 65 cents a share minus items, up 35%, on sales of $1.39 billion, up 20%. Like Microsoft ( MSFT ), Adobe has earned the favor of investors through its transition from desktop software to Internet cloud computing services. Adobe has three cloud computing businesses: Creative Cloud, Marketing Cloud and Document Cloud. The biggest is Creative Cloud, which includes well-known products for creative professionals such as Photoshop, Illustrator and InDesign. Marketing Cloud provides online marketing and advertising services. Document Cloud leverages Adobe’s popular online document-sharing product Acrobat and its ubiquitous PDF format. Adobe stock was down a fraction, near 86.50, in afternoon trading on the stock market today . Adobe hit an all-time high of 96.42 on Dec. 17, just days after it reported better-than-expected fiscal Q4 earnings . UBS analyst Brent Thill on Monday reiterated his buy rating on Adobe stock with a 12-month price target of 105. In a research report, Thill said that he expects Adobe’s Q1 report to be a “solid kickoff to the year.” Investors will be focused on Creative Cloud subscribers, Digital Media annual recurring revenue and operating expenditures, Thill said. “We expect few surprises, as we think the creative/marketing spend environment was generally stable and we did not detect any significant promotions,” he said. “Macro remains a potential risk for the year, but for ADBE to get hit, we would have to see a prolonged recession, including sharp cuts to advertising & marketing budgets leading to layoffs in related staff, which we do not see as a high probability at this time.” Adobe will be better shielded from recessions than some other companies, since most of its revenue now is on a subscription basis, he said. Adobe exited fiscal Q4 with 74% recurring revenue. “ADBE remains a top large-cap growth story, with double-digit revenue growth, expanding 30%+ margins and clear leadership in its core markets,” Thill said. Rosenblatt Securities analyst Kirk Adams on Friday maintained his buy rating on Adobe stock, with a price target of 112. “We believe that their core businesses of Creative and Marketing Cloud will show strong growth in both revenues and earnings,” Adams said. “More importantly, we believe their outlook will remain strong.”