Janney Montgomery Scott Upgrades Adobe Systems (ADBE) to Buy; A Very Compelling Product Cycle
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Janney Montgomery Scott upgrades Adobe Systems (Nasdaq: ADBE) from Neutral to Buy. Fair value increased from $33 to $43.
Janney analyst says, "We anticipate a strong CS5 product release next year, resulting in 14% creative solutions revenue growth YoY (vs. a likely 19% decline in F09). We are estimating full year F2010 revenues of $3.73 billion, with further upside quite likely to $3.8 billion. On the bottom line, we estimate EPS of $1.90, with an upside to $2.00...We anticipate a strong CS5 release in, as pent-up demand, operating system refresh for Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL), and an improving economy all work in Adobe's favor. F2009 has been a difficult one for Adobe. The company's flagship CS4 suite, released in 4Q08, came out at a very difficult time for the economy and Adobe's customer base, resulting in very poor performance for the creative services segment--and with revenue likely declining 19% YoY in F2009. However, based on our conversations with resellers, this is now likely to translate into a very strong 2010 CS5 release--as it benefits from pent-up demand."
"We estimate F2010 revenues of $3.73 billion (vs. consensus at $3.55 billion) and EPS of $1.90 (vs. consensus of $1.78). On the top line, we are looking for a $426 million revenue contribution from Omniture (11% of revenue) and 14% organic growth (ex-Omniture)--after a 19% revenue decrease
in F2009. On margins, we project an operating margin of 34%, a 50 bps decrease from FY2009; we believe due to the strict cost discipline and control as well as its ability to leverage its infrastructure for the Omniture acquisition, impact of the Omniture acquisition is likely to be quite limited."
To see more analyst ratings on ADBE Click Here.
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