Wachovia Downgrades Adobe Systems (ADBE) to Market Perform, Citing Lack of Near-Term Catalysts

February 27, 2009 9:24 AM EST

Wachovia downgrades Adobe Systems (Nasdaq: ADBE) from Outperform to Market Perform.

Wachovia analyst says, "We are downgrading our rating and estimates for ADBE ahead of the company’s FQ1 earnings release on March 17, 2009. We believe that unfavorable economic conditions and a weak ad market continue to impact Adobe’s sales. Our channel checks indicate a slower uptake for the new CS4 version which shipped in English languages versions in FQ4 and other major language versions in FQ109. We believe that the conversion rates to the new CS4 product cycle are likely to be lower than our original estimate. Our retail checks indicate that while there continues to be interest in the new version, due to the weak macroeconomic headwinds, customers are choosing to skip the CS4 upgrade and wait for the next version CS5 in mid to late FY10. We believe that CS4 sales are down as much as 20% among certain resellers despite aggressive rebates and discounting...and we believe Adobe's current valuation is attractive. But we are downgrading our rating on the shares of ADBE to Market Perform due to the lack of positive near term catalysts."

Adobe Systems Incorporated (Adobe) is a diversified software companies.

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