Adobe Poised for Financial Report Amid Mixed Investor Sentiment
San Jose, California-based Adobe Inc. (ADBE) stands as a leading software firm, diversifying its operations across Digital Media, Digital Experience, and Publishing and Advertising sectors. With a considerable market cap of $211.8 billion, Adobe ranks among the largest software companies worldwide. The company is set to release its Q4 earnings report right after the market closes on Wednesday, December 11.
Analysts Anticipate Earnings Growth
Before the earnings announcement, analysts predict that Adobe will report a profit of $3.77 per share, reflecting a 7.1% increase from the $3.52 per share reported in the same quarter last year. Interestingly, the company has outperformed Wall Street’s earnings expectations in three of the past four quarters, although it had one miss. For the last reported quarter, Adobe’s adjusted EPS of $3.81 was nearly 5% higher than consensus estimates.
Future Projections Show Promise
Looking ahead to fiscal 2024, analysts expect Adobe to achieve an adjusted EPS of $14.82, marking a 15.8% rise from $12.80 in fiscal 2023. Projections for fiscal 2025 indicate continued growth, with an expected adjusted EPS of $16.74, nearly 13% higher year-over-year.
Stock Performance Lags Behind Market Competitors
Despite strong prospects, ADBE’s stock has dropped 19.3% year-to-date, significantly lagging behind the S&P 500 Index’s gain of 22.1% and the Technology Select Sector SPDR Fund’s (XLK) return of 19.6% during the same period.
Challenges and Analyst Recommendations
Adobe’s shares fell 8.5% the day after announcing Q3 revenue of $5.4 billion on September 12. The decline came as the company’s Q4 earnings forecast disappointed analysts. Factors contributing to this outlook included fierce competition and lower demand for Adobe’s AI-integrated editing tools, compounded by high interest rates and an economic climate where customers are tightening budgets. Furthermore, rising operating expenses, which reached $2.9 billion, have raised additional concerns among investors regarding Adobe’s future profitability.
The general consensus on ADBE stock remains moderately bullish, reflected in an overall “Moderate Buy” rating. Out of 31 analysts monitoring the stock, 22 suggest a “Strong Buy,” one suggests a “Moderate Buy,” six propose a “Hold,” and two recommend a “Strong Sell.” The average price target for ADBE is set at $609.27, suggesting a potential upside of 26.7% from current levels.
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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
