Earnings Previews: Adobe, Lennar

The pace of earnings reports has slowed to a trickle as the end of the September quarter approaches. No notable earnings reports were released late Tuesday, nor are any scheduled for release on Wednesday.

Here is a look at two companies scheduled to report quarterly results after U.S. markets close on Thursday.

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Adobe

Software maker Adobe Inc. (NASDAQ: ADBE | ADBE Price Prediction) posted a new 52-week high on Tuesday, capping a six-month share price gain of almost 65% and a 12-month gain of nearly 37%.

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Since early June, Adobe has received upgrades from five analysts, including BofA and Morgan Stanley. The average price target of the five upgrades was $98 per share. The proposed $20 billion acquisition of cloud-based collaborative design software maker Figma remains in limbo, awaiting approval from EU, U.K. and U.S. regulators.

Of 38 analysts covering the stock, 25 have a Buy or Strong Buy rating, and the other 13 have Hold ratings. At a recent price of around $542.00 a share, the implied upside based on a median price target of $572.00 is 5.5%. At the high target of $660.00, the upside potential is 21.8%.

Fiscal third-quarter revenue is forecast at $4.87 billion, which would be up 1.1% sequentially and by 9.9% year over year. Adjusted earnings per share (EPS) are forecast at $3.98, up 1.8% sequentially and 17.1% higher year over year. For the full 2023 fiscal year ending in November, analysts are forecasting EPS of $15.73, up 14.7%, on sales of $19.33 billion, up 9.8%.

Adobe stock trades at 34.5 times expected 2023 EPS, 30.5 times estimated 2024 earnings of $17.76, and 26.3 times estimated 2025 earnings of $20.58 per share. Its 52-week trading range is $274.73 to $570.24. Adobe does not pay a dividend. Total shareholder return for the past year was 36.80%.

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Lennar

Homebuilder Lennar Corp. (NYSE: LEN) has seen its share price rise by nearly 45% over the past 12 months.

In a somewhat counterintuitive market, rising interest rates have been encouraging sales of new homes. Homeowners with existing mortgages with low interest rates have been reluctant to sell and take on a much higher interest rate. Buyers have decided that buying a new house is better than waiting for the market to open up again, and homebuilders like Lennar, KB Home (up nearly 66% year over year) and D.R. Horton (up almost 55%) are all doing well.

Last month, Berkshire Hathaway revealed new positions in Lennar and two other homebuilders with an investment of $800 million.

Of 23 analysts covering the stock, 14 have a Buy or Strong Buy rating, and seven more rate it at Hold. At a share price of around $115.00, the upside potential based on a median price target of $138.00 is 20%. At a high target of $161.00, the upside potential is 40%.

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For its first quarter of fiscal 2023, Lennar is expected to report revenue of $8.52 billion, up 5.9% sequentially but 4.6% lower year over year. Adjusted EPS are pegged at $3.53, up 20.1% sequentially and down 31.9% year over year. For the full fiscal year ending in November, EPS are forecast at $12.77, down 28.7%, on sales of $32.51 billion, down 3.5%.

Lennar stock trades at 9.0 times expected 2023 EPS, 8.4 times estimated 2024 earnings of $13.67 and 7.6 times estimated 2025 earnings of $15.04 per share. The 52-week trading range is $69.90 to $133.24. Lennar pays an annual dividend of $1.50 (yield of 1.25%). Total shareholder return for the past year is 46.72%.