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Adobe (ADBE) Stock Gains as Credit Suisse Ups Price Target
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On Friday, Credit Suisse increased Adobe Systems’ (ADBE - Free Report) target price by almost 20% to $150 from $125. Additionally, Credit Suisse analyst upgraded the rating on the stock to Outperform from Neutral.
Adobe shares inched up 0.65% in response, eventually closing at $127.70.
Also, shares of Adobe have been steadily treading higher for the last one year. The stock returned 38.20% compared with the Zacks Computer Software industry’s gain of 21.69%.
Rating Rationale
The analyst believes that the software company will witness increased revenue, earnings and operating cash flows expansion. Michael Nemeroff, an analyst at Credit Suisse, is optimistic about the continued upside as a result of Adobe's Creative Cloud (CC) business.
Nemeroff said, “We expect continued momentum in its highly profitable Creative Cloud business that we expect will lead to stronger than expected operating cash flows over the next few years."
Nemeroff expects the growth momentum in Creative Cloud to continue, which will expand Adobe’s market share by attracting new customers to its Creative business. This will continue to increase net subscribers, thus expanding cloud revenues, going forward.
In the last reported fiscal first quarter, revenues of $1.68 billion increased 4.6% sequentially and 21.6% year over year. Also, Creative revenues were $942 million, up 29% year over year. Creative ARR increased $244 million to $3.76 billion.
Management was optimistic about CC adoption and expects to build a strong pipeline for its potential paid subscribers through marketing programs and CC software tools like Photoshop. Management expects growth to be fueled by three initiatives –– by migrating the Creative Suite installed base, drawing new clients and driving ARPU higher through cloud services like Adobe Stock. Also, CC mobile apps are continuously driving customer traffic and strengthening customer adoption.
For the fiscal second quarter of fiscal 2017, management expects revenues of $1.73 billion. Analysts polled by Zacks expect revenues of $1.73 billion, in line with the guided figure.
Based on a share count of 499 million, management expects GAAP earnings per share of 66 cents and non-GAAP earnings of 94 cents. The Zacks Consensus Estimate is pegged at 77 cents, well below the guided range.
Bottom Line
We remain positive about Adobe’s market position, compelling product lines (including CS cloud initiative and digital media products), continued innovation and strong balance sheet.
We believe that the company is being driven by continuous innovation in its Creative Cloud and Marketing Cloud businesses. Additionally, we believe that the constant adoption of Adobe Marketing Could serves as a catalyst.
For the current year, estimates for ON Semiconductor went up 7.8% in the last 60 days. Estimates for Alibaba and Advanced Energy increased 22.8% and 18.2%, respectively.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Adobe (ADBE) Stock Gains as Credit Suisse Ups Price Target
On Friday, Credit Suisse increased Adobe Systems’ (ADBE - Free Report) target price by almost 20% to $150 from $125. Additionally, Credit Suisse analyst upgraded the rating on the stock to Outperform from Neutral.
Adobe shares inched up 0.65% in response, eventually closing at $127.70.
Also, shares of Adobe have been steadily treading higher for the last one year. The stock returned 38.20% compared with the Zacks Computer Software industry’s gain of 21.69%.
Rating Rationale
The analyst believes that the software company will witness increased revenue, earnings and operating cash flows expansion. Michael Nemeroff, an analyst at Credit Suisse, is optimistic about the continued upside as a result of Adobe's Creative Cloud (CC) business.
Nemeroff said, “We expect continued momentum in its highly profitable Creative Cloud business that we expect will lead to stronger than expected operating cash flows over the next few years."
Nemeroff expects the growth momentum in Creative Cloud to continue, which will expand Adobe’s market share by attracting new customers to its Creative business. This will continue to increase net subscribers, thus expanding cloud revenues, going forward.
In the last reported fiscal first quarter, revenues of $1.68 billion increased 4.6% sequentially and 21.6% year over year. Also, Creative revenues were $942 million, up 29% year over year. Creative ARR increased $244 million to $3.76 billion.
Management was optimistic about CC adoption and expects to build a strong pipeline for its potential paid subscribers through marketing programs and CC software tools like Photoshop. Management expects growth to be fueled by three initiatives –– by migrating the Creative Suite installed base, drawing new clients and driving ARPU higher through cloud services like Adobe Stock. Also, CC mobile apps are continuously driving customer traffic and strengthening customer adoption.
Adobe Systems Incorporated Price and Consensus
Adobe Systems Incorporated Price and Consensus | Adobe Systems Incorporated Quote
2Q Guidance
For the fiscal second quarter of fiscal 2017, management expects revenues of $1.73 billion. Analysts polled by Zacks expect revenues of $1.73 billion, in line with the guided figure.
Based on a share count of 499 million, management expects GAAP earnings per share of 66 cents and non-GAAP earnings of 94 cents. The Zacks Consensus Estimate is pegged at 77 cents, well below the guided range.
Bottom Line
We remain positive about Adobe’s market position, compelling product lines (including CS cloud initiative and digital media products), continued innovation and strong balance sheet.
We believe that the company is being driven by continuous innovation in its Creative Cloud and Marketing Cloud businesses. Additionally, we believe that the constant adoption of Adobe Marketing Could serves as a catalyst.
Adobe currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in the broader technology sector are ON Semiconductor Corporation (ON - Free Report) , Alibaba Group Holding Limited (BABA - Free Report) and Advanced Energy Industries, Inc. (AEIS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, estimates for ON Semiconductor went up 7.8% in the last 60 days. Estimates for Alibaba and Advanced Energy increased 22.8% and 18.2%, respectively.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>