Earnings Beat Estimates as Revenue Sources Change
Adobe’s Q3 EPS of 60 cents beat the consensus estimate of 58 cents, and its revenue of $1.46 billion was in-line with expectations.
Perhaps the biggest news out of the company’s latest report is the complete change in how it derives its revenue. In the most recent quarter, subscription products comprised 80% of ADBE’s sales, versus 41% last year. Products contributed just 12% of revenues this time around, against 18% in 2015. Clearly, the company has transformed itself from a pure seller of packaged software into more of a cloud-based recurring revenue machine.
Adobe also boosted its full-year outlook amid the report, now expecting 2016 EPS of $2.94-3.00 from a prior $2.80. Analysts are looking for $2.87 per share for the year.
Analysts are Bullish on ADBE
In response to the positive earnings report, Wall Street analysts are out in droves today with bullish commentary on Adobe. Here’s a summary of the moves we’ve seen so far:
- Pivotal Research raises PT to $125 from $124
- Pacific Crest raises PT to $122 from $110
- Morgan Stanley raises PT to $110 from $100
- Citigroup reiterates Buy rating, $117 PT
- Canaccord Genuity raises PT to $120 from $110
- Cowen & Company raises PT to $120 from $115
- RBC Capital raises PT to $116
Investors should expect more positive analyst moves over the coming days as well, especially if we see strong price follow-through from last night’s solid report.
Adobe shares rose $4.88 (+4.85%) to $105.50 in premarket trading Wednesday. Year-to-date, ADBE has gained 7.11%.