Adobe (ADBE) PT Lowered to $560 as Oppenheimer Sees Signs of Deceleration
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Oppenheimer analyst Brian Schwartz lowered the price target on Adobe (NASDAQ: ADBE) to $560.00 (from $660.00) after F1Q revenue met expectations and EPS exceeded. F1Q total revenue of $4.26B (+9% y/y, 17% y/y when adjusted for the extra week in the prior F1Q) was ~$20M above the $4.24B consensus estimate, essentially in-line. Digital Media revenue of $3.11B (+9% y/y) was ~$10M above the $3.10B consensus estimate. PF EPS of $3.37 (+8% y/y) was $0.04 above the $3.34 consensus estimate. The company also reported upside to ARR metrics and margins, and strength across the segments. Management expects a strong 2H:FY22 partially from Digital Media price increases however, these positives are offset by signs of business deceleration, soft F2Q guidance, and a higher tax rate.
The analyst reiterated an Outperform rating, stating "the business is becoming more seasonal and makes FY2022 more back end loaded than pre-print. F1Q is also the second straight quarter that ADBE has not beat-and-guide-above despite Digital Media ARR outperforming and operating expenses coming in below consensus expectations in the quarter. This raises questions around the momentum of the business, though overall we think it was a good F1Q for Adobe that shows healthy demand. Lower PT to $560 from $660 on group multiples compression."
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