Jefferies Cuts Target on Adobe (ADBE) Following Adjustment; Outlines Growth Potential for Creative Segment
Tweet
Share
E-mailGet Alerts ADBE Hot Sheet
Price: $264.02 -2.39%
Rating Summary:
23 Buy, 30 Hold, 6 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
23 Buy, 30 Hold, 6 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
Jefferies cuts price target on Adobe Systems (Nasdaq: ADBE) from $36 to $35, while maintaining a Buy rating following an update from the company late Tuesday.
The key takeaway from the update Jefferies got was: "We thought the risk of a growth reset for FY12 had diminished following our recent work. We were wrong. But according to ADBE, the change to growth is driven by a reduction in revs from the Enterprise segment, which we view as less core. ADBE still has to prove that it can grow the core segments 10%, but the reset should help achieve that goal."
On growth reset, Jefferies admitted it was wrong to think that "strength in the Creative franchise coupled with lower expectations for Enterprise and Omniture meant that the risk of a reset was lower." Adobe said the reset comes from the Enterprise segment.
Jefferies sees growth in the Creative franchise from: i) re-tooling of the portfolio around open standards such as HTML5; ii) new subscription services, such as the Adobe Creative Cloud; and iii) the potential to capture more developer mind (and ultimately dollar) share with tools such as PhoneGap.
Looking to earnings, Jefferies is lowering its' 2012 expectation from $2.58 to $2.47 per share, while first- through fourth-quarter EPS expectations move from 55, 65, 65, and 72 cents to 52, 62, 63, and 69 cents, respectively.
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 $30.42 yesterday.
The key takeaway from the update Jefferies got was: "We thought the risk of a growth reset for FY12 had diminished following our recent work. We were wrong. But according to ADBE, the change to growth is driven by a reduction in revs from the Enterprise segment, which we view as less core. ADBE still has to prove that it can grow the core segments 10%, but the reset should help achieve that goal."
On growth reset, Jefferies admitted it was wrong to think that "strength in the Creative franchise coupled with lower expectations for Enterprise and Omniture meant that the risk of a reset was lower." Adobe said the reset comes from the Enterprise segment.
Jefferies sees growth in the Creative franchise from: i) re-tooling of the portfolio around open standards such as HTML5; ii) new subscription services, such as the Adobe Creative Cloud; and iii) the potential to capture more developer mind (and ultimately dollar) share with tools such as PhoneGap.
Looking to earnings, Jefferies is lowering its' 2012 expectation from $2.58 to $2.47 per share, while first- through fourth-quarter EPS expectations move from 55, 65, 65, and 72 cents to 52, 62, 63, and 69 cents, respectively.
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 $30.42 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
- Pro Diversity Network (IPDN) Reports Q2 Loss of $0.15
- Zeo Energy Corp (ZEO) Misses Q2 EPS by 7c
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Jefferies & Co, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
