What to Look for in Adobe Earnings

By Chris Lange Updated Jan 12, 4:45PM EST · Published Dec 14, 12:35PM EST

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What to Look for in Adobe Earnings — © Thinkstock

Adobe Systems Inc. (NASDAQ: ADBE) is set to release its fiscal fourth-quarter earnings report after the markets close on Thursday. The consensus estimates from Thomson Reuters are $0.86 in earnings per share (EPS) and $1.59 billion in revenue. In the same period of last year, Adobe posted EPS of $0.62 and $1.31 billion in revenue.

In a recent report, Credit Suisse said that it believes that Adobe’s second-quarter results and guidance are good but not great enough for its premium valuation. Despite the outperformance last quarter, management just reiterated its prior fiscal 2016 annual marketing cloud growth of over 20%. While the firm believes Adobe’s results and fiscal fourth-quarter guidance generally were good, just meeting expectations may not be enough for a large-cap software stock that trades at such a premium valuation, in its view.

That said, Credit Suisse continues to have a positive view on Adobe’s industry-leading stack of digital media and digital marketing assets, large market opportunity and skilled management team. However, the firm believes the current premium valuation on the stock already reflects the existing growth trajectory, but it sees a lack of near-term catalysts that would justify further multiple expansion beyond current levels.

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Prior to the release of the earnings report, a few other analysts also weighed in on Adobe:

Cowen reiterated a Buy rating.
BTIG Research reiterated a Neutral rating.
Deutsche Bank reiterated a Buy rating with a $125 price target.
Pacific Crest reiterated a Buy rating with a $122 price target.
Wunderlich reiterated a Hold rating with a $115 price target.
Oppenheimer reiterated a Market Perform rating.

So far in 2016, Adobe has performed about in line with the broad markets, with the stock up 13%.

Shares of Adobe were trading at $106.07 on Wednesday, with a consensus analyst price target of $120.92 and a 52-week trading range of $71.27 to $111.09.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.