Adobe (ADBE) Edges Higher After Topping Q2 Estimates, Analysts Raise PT on 'Impressive' Performance

June 18, 2021 7:00 AM EDT
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Price: $625.87 +0.35%

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Shares of Adobe (NASDAQ: ADBE) are up over 3% in pre-market trading Friday after the tech giant reported better-than-expected Q2 earnings.

Adobe reported earnings per share of $3.03 to easily top the $2.81 expected from analysts. Sales for the quarter soared 24% to $3.84 billion which is higher than the $3.73 billion expected.

“Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe. “Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”

“Adobe delivered strong Digital Media annualized recurring revenue and Digital Experience bookings, as well as record cash flows from operations in Q2,” said John Murphy, executive vice president and CFO, Adobe. “The large market opportunity and momentum we are seeing across our creative, document and customer experience management businesses position us well to deliver another record year.”

For the ongoing quarter, ADBE is looking to make a profit of $3.00 per share on sales of $3.88 billion to again top the $2.89 per share expected on sales of $3.83 billion.

Mizuho’s Gregg Moskowitz praised “impressive Q2 performance” and moved the price target higher to $640.00 per share from $600.00 per share.

“ADBE reported a robust F2Q, led by meaningfully accelerating net new Digital Media ARR growth, and healthy Digital Experience upside. ADBE also cited accelerated Creative Cloud demand in EMEA/Asia Pacific, and a stronger SMB recovery. In addition, the F3Q guide was well above consensus. In our view, ADBE's expansive portfolio of software solutions has made it the gold standard in content creation, consumption, and collaboration. More broadly, we believe ADBE is very well-positioned to benefit from digital transformation with its comprehensive end-to-end offering that differentiates it from competitors and should enable the co. to drive more holistic sales across its clouds,” Moskowitz said in a note.

“We continue to view ADBE’s acquisition of Workfront as highly strategic and believe it will serve as a significant growth driver for Experience Cloud going forward.”

Oppenheimer analyst Brian Schwartz noted “strong” results from ADBE and he raised the price target to $600.00 per share from $550.00 per share.

“Adobe reported strong F2Q results and guidance ahead of expectations on both top and bottom line. Bookings and cash generation were strong too, and F2Q results show the company executing well against its strategy of offering a complete customer experience platform. Negatively, management didn't raise the annual guidance, but the beat and guide above lowers F4Q estimate risks. Collectively, we see the strong quarterly results and guidance from Adobe and Salesforce as a sign that demand for customer engagement tools and solutions are a priority in the current IT buyer mindset. Given this backdrop, we believe ADBE's valuation multiples can hold up over the summer as investors start looking forward to the seasonally stronger second half, and ADBE can move higher on the future growth,” the analyst wrote in a report sent to clients.

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