Suddenly, Everyone Loves Adobe (ADBE)

Adobe Systems Inc. (NASDAQ: ADBE) gave some mixed guidance last night, but in today’s climate of tech washouts any guidance is a win.  That is what we are seeing this morning, and analyst calls are helping to push the shares up further.

Adobe warned of soft revenue with in-line earnings.  The company said its revenue would be $783 million to $786 million.  That is under a prior internal target of $800 million to $850 million, and below consensus estimates of $792 million.

Adobe expects Q2 revenue of $675 million to $725 million, which is under the $776.3 million consensus estimate.  The company said that weakness in the creative and knowledge worker units were the primary reason for the  shortfall.

On the earnings front in Q1, the company forecasted $0.44 to $0.45 EPS on an adjusted basis and $0.30 on a net basis.  Consensus estimates are $0.42 EPS on an adjusted basis.  Its strength in a weak environment is from expense management and attention to margins.   For Q2, Adobe is targeting 21% to 26% on a GAAP basis, and 32% to 36% on a non-GAAP basis.

And then there are the analyst upgrades this morning now that things are holding up better than many would have guessed.  UBS raised its rating to “Buy” from “Neutral,” which is actually an almost perfectly timed call since UBS removed its “Sell” rating and raised it to “Neutral” just back on March 2, 2009.

FBR raised its rating to “Market Perform” from “underperform.”  Jefferies raised its rating to “Buy” from “Hold.”

So far this morning, shares are up 10% at $18.03 after closing at $16.32 yesterday.  Its 52-week trading range is $15.70 to $46.44.

Jon C. Ogg
March 5, 2009