Adobe Systems Incorporated (ticker: ADBE) shares jumped more than 4 percent to new all-time highs on Wednesday after the company topped Wall Street’s quarterly revenue and earnings expectations. On Tuesday afternoon, Adobe reported impressive fiscal second-quarter numbers driven by strength in its cloud services segment,
Adobe also issued impressive guidance for the quarter ahead.
Adobe reports non-GAAP earnings per share of $1.02 on revenue of $1.77 billion for the second quarter, topping consensus analyst expectations of 95 cents and $1.73 billion, respectively. Adobe also says it expects third-quarter non-GAAP EPS of $1 on revenue of $1.81 billion.
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Adobe’s 29 percent growth in its creative cloud segment in the second quarter is particularly noteworthy. Subscription revenue also jumped 37 percent, and the company reported that 86 percent of its total revenue now comes from recurring sources.
“Adobe continues to execute well, with another quarter of record revenue and operating profit in Q2,” CFO Mark Garrett says. “We’re excited about the strong business momentum we have as we enter the second half of fiscal 2017 and remain confident in our ability to drive strong revenue and earnings growth in the future.”
Adobe’s business seems to be firing on all cylinders, and Wall Street is taking notice.
“Our bullish thesis on ADBE shares stems from our expectations for 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,” Credit Suisse analyst Michael Nemeroff says.
Wunderlich Securities raised its price target for Adobe stock from $145 to $165, and analyst Ryan MacDonald says the stock’s premium valuation is well-deserved.
“Heading into [the second half of ] 2017, the company is experiencing strong momentum with positive trends in stock, video, acrobat, and analytics, while Ad Cloud remains in the early stages,” MacDonald says. “We believe the premium multiple is warranted as Adobe presents an unmatched combination of revenue growth, margin expansion and EPS growth at scale combined with consistently strong execution.”
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Wunderlich maintains a “buy” rating on Adobe, and Credit Suisse maintains an “outperform” rating on the stock.
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Adobe Systems Incorporated (ADBE) Record Quarter Impresses Wall Street originally appeared on usnews.com
