UBS Remains bullish on Adobe Systems (ADBE) Ahead of 3Q Report
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UBS reiterated a Buy rating and $122.00 price target on Adobe Systems (NASDAQ: ADBE) ahead of the company's 3Q earnings report.
Analyst Brent Thill commented, "Although ADBE's core is healthy, we see the possibility of investors getting complacent, esp. with potential NT headwinds. Our checks indicate business on track: 1) no unusual promos; + users are renewing at full price; 2) still early for back-to-school season results but so far so good; 3) deeper into business model transition with >80% recurring revs in last 2 Qs; 4) competitive position remains as strong as ever. But this positive view has become consensus: 78%"Buy" ratings vs. 71% a yr ago, and stock +7% YTD (vs. NASDAQ +4%) and near all-time high. And NT factors could cap Q3 upside, including slow seasonality and heightened FX headwinds post-UK referendum. We still see 22% upside to our 12-mo PT, though driven more by earnings growth than multiple expansion as the business model is getting normalized. Next major catalyst after Q3 earnings is MAX user conf. on Nov 2-4 (analyst day on 11/2), when we could get an early view into FY17 outlook."
Shares of Adobe closed at $100.32 yesterday.
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