Technology

What to Expect From Adobe Earnings

Earnings season is winding down, but Adobe Systems Inc. (NASDAQ: ADBE) is set to report earnings on Tuesday after the close. The software maker’s shares are down just over $3 from the high of $71.11, but they are still up 70% from their 52-week low as well.

Thomson Reuters has the consensus estimates at $0.25 in earnings per share and $973.1 million in revenue. This would be a contraction from $0.35 in earnings per share a year ago, and revenue would be down by 3.5%. Estimates for the coming quarter are earnings of $0.27 per share and $990.3 million in revenue.

This marks the conclusion of its first quarter of 2014, which ends in November of this year. Based on the lower earnings numbers, Adobe now trades at 60 times expected earnings. If you go out a year further, Adobe earnings are expected to grow 80% and revenue is expected to grow almost 20% to almost $4.9 billion.

Adobe also trades at close to five times book value and about eight times sales. Here are some other basic observations for the company:

  • Options traders appear to be braced for a move of up to 5% on the news.
  • While it trades at $68 or so, the 50-day moving average is down at $64.00, and the 200-day moving average is way down at $53.95.
  • Adobe shares are up 13.5% since the end of 2013.
  • Resistance has been up between $79 and $80 since February.

The consensus price target is down at $66.95 according to Thomson Reuters.

Also, keep in mind that Adobe gave long-term guidance with its last earnings report — at $950 million to $1 billion in quarterly revenue and $0.22 to $0.28 per share on earnings. For fiscal 2014, sales were projected to be flat and $1.10 in earnings per share on a comparable basis. Earnings from operations for 2015 were put at $2.00 per share and at least $3.00 per share in 2016.

 

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