In the first half-hour of Wednesday trading, the Dow Jones industrials were down 0.37%, the S&P 500 down 0.02% and the Nasdaq down 0.19%. Low gasoline prices accounted for 60% of the 0.3% decline in the May producer price index (PPI) for final demand. Over the past 12 months, PPI is up 1.1%, the smallest gain since late 2020. Core PPI, which excludes food, energy and trade services, was flat month over month. For the 12-month period through May, core PPI rose 2.8%.

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After U.S. markets close Wednesday, homebuilder Lennar will report quarterly results. Jabil and Kroger are on deck to report earnings first thing Thursday morning.

After markets close Thursday, just one tech firm is scheduled to report earnings. No notable reports are due until after markets close next Tuesday.

Adobe

Software maker Adobe Inc. (NASDAQ: ADBE) posted a new 52-week high Tuesday, capping a year-to-date share price gain of 42% and a 12-month gain of nearly 29%. Over the past month, shares are up nearly 43% on the strength of the company’s solid move into generative AI.

Adobe’s history as a leading provider of content creation software set it up for the move, and the March launch of its free Firefly website, complete with generative AI capability, left only one question unanswered: how will the company monetize the new content creation tools? A week ago, the company announced its Firefly for Enterprise subscription-based version for commercial customers. The company’s success at moving users to its subscription-based Photoshop software is a model Adobe expects to be transferable to its AI tools.

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The U.S. Securities and Exchange Commission has yet to decide on filing an antitrust suit opposing Adobe’s proposed $20 billion acquisition of cloud-based collaborative design software maker Figma. In early May, the U.K.’s antitrust regulator also launched a probe into the proposed deal. Adobe argues that the deal is not anti-competitive because Adobe’s leading products are aimed at content creators, while Figma’s collaborative product design tools address a different market. The two companies could have a hard time convincing the SEC that this is more than a distinction without a difference.

Of 36 analysts covering the stock, 19 have a Buy or Strong Buy rating and the other 17 have Hold ratings. At a recent share price of around $479.00, the stock has outrun its median price target of $450.00%. At the high target of $540.00, the upside potential is 12.7%.

Fiscal second-quarter revenue is forecast at $ 4.77 billion, which would be up 2.5% sequentially and by 8.7% year over year. Adjusted earnings per share (EPS) are forecast at $3.79, essentially flat sequentially and 13.1% higher year over year. For the full 2023 fiscal year ending in November, analysts forecast EPS of $15.39, up 12.3%, on sales of $19.3 billion, up 9.6%.

Adobe stock trades at 31.1 times expected 2023 EPS, 27.5 times estimated 2024 earnings of $17.43 and 24.2 times estimated 2024 earnings of $19.80 per share. The stock’s 52-week trading range is $274.73 to $491.51. Adobe does not pay a dividend. Total shareholder return for the past year was 28.88%.

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