UBS Raises Price Target on Adobe Systems (ADBE) Following Solid 3Q

UBS reiterated a Buy rating on Adobe Systems (NASDAQ: ADBE), and raised the price target to $130.00 (from $122.00), following the company's 3Q earnings report.ADBE reported revenue of $1464M, ahead of $1,445M estimates. EPS of $0.75 came in 0.03 ahead of estimates.

Analyst Brent Thill commented, "We believe strong results across all Clouds + oper. leverage showed ADBE stock still has room to run despite being near record levels. We are raising our 12-mo PT from $122 to $130, using same 30x P/E (PEG 1.0x) on EPS in 5-8 Qs, which may still be conservative. We think the stock could reach $150 if EPS hits $6 in FY19 (current UBSe $5.68) on a muted 25x P/E vs. current 29x NTM. What is driving momentum for each segment (details in next bullet)? Creative Cloud: still room in base migration + adding new users; renewal at full price from discounted; Japan & Germany above pace; Fotolia/Stock x-sells; and digital content explosion across web & mobile. Document Cloud: fast migration to subs. Marketing Cloud: Clients looking for digital transformation choosing leader ADBE (43% share among large vendors) with broadest suite – accelerating deals in Q3 and buying multiple modules; int'l still a big opp. Next catalyst is MAX user conf. on Nov 2-4 (analyst day on 11/2), when we could get an early view into FY17 outlook."

For an analyst ratings summary and ratings history on Adobe click here. For more ratings news on Adobe click here.

Shares of Adobe closed at $100.62 yesterday.

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