Apps & Software

Adobe Analysts Pile On Even More Price Target Hikes Right Into Profit-Taking

Jon C. Ogg

Published: September 16, 2020 10:46 am

It goes without saying that Adobe Inc. (NASDAQ: ADBE) had high expectations heading into its earnings. After all, analysts had been piling on with higher price targets in the 10 days ahead of the earnings report. The post-earnings reaction also has seen many analyst price targets hiked.

The breakdown for the earnings beat was unilateral gains from a year earlier. During the quarter, Digital Media revenue increased 19% year over year to $2.34 billion. Creative revenue grew 19% to $1.96 billion, and Adobe’s Document Cloud revenue was up 22% to $375 million. A full breakdown of those numbers and annualized recurring revenue was covered in more detail.

One issue to consider about the post-earnings reaction is that a lot of the great news was built into the stock ahead of time. Despite multiple transformations over the years, Adobe has been public since 1986. It is still valued at nearly 50 times expected earnings for this year and at nearly 45 times expected 2021 earnings. Adobe also has so far refused to get on the technology dividend-paying train as well.

24/7 Wall St. has tracked more than a dozen analyst target hikes on Wednesday, and some of these hikes are from the exact same analysts that hiked their targets or raised their ratings in the days ahead of the earnings report.

Barclays reiterated its Overweight rating and raised its target to $600 from $530, but just on September 9 the firm also reiterated its same Overweight rating and raised its target from $450 to $530.

BofA Securities reiterated Adobe as a Buy and raised its price objective to $570 from $440.

BMO Capital Markets reiterated its Outperform rating and raised its target from $535 to $560.

Cowen reiterated its Outperform rating, after upgrading it from Market Perform on September 11. The analyst raised Adobe’s price target $585 from $555 on Wednesday morning, though the firm had raised its target to $555 from $400 on that formal upgrade last week.

Credit Suisse reiterated its Outperform rating and raised its target to $560 from $425.

Jefferies reiterated its Buy rating and raised its target $600 from $570, though it just reiterated its Buy rating on September 9 and took the target up to that $570 mark from a prior $470.

Morgan Stanley reiterated its Overweight rating and raised its target to $560 from $450 on September 14.

Oppenheimer reiterated its Outperform rating and raised its target from $430 to $550.

Piper Sandler reiterated its Overweight rating and raised its target to $570 from $430.

RBC Capital Markets reiterated it as Outperform and raised its target to $570 from $550. Just on September 10, the firm reiterated its Outperform rating and raised its target from $440 to $550.

Stifel reiterated its Buy rating and raised its target to $550 from $426.

UBS reiterated its Buy rating again and raised its target to $577 from $540. On September 10, the firm reiterated its Buy rating and raised its target to $540 from $450.

Not every single analyst is pounding the table for clients to buy Adobe’s stock, now that it has run up so much. After all, Adobe was last seen up about 50% year to date, and its stock was up about 75% from a year ago.

Citigroup reiterated its Neutral rating on Adobe, and it may be the sole target cut, to $523 from $530.

Goldman Sachs reiterated its Neutral rating but raised its target price to $520 from $460.

Wells Fargo reiterated Adobe as Equal Weight and raised its target price from $375 to $500.

The shares closed up 2.4% at $497.67 ahead of earnings, and were up 2% at $508.00 in Wednesday’s premarket trading. Adobe stock was last seen down about 3.3% at $481.11.