Adobe (ADBE) Tops Q3 Estimates, After-Hours Move Lower in Shares Creates a Buying Opportunity Says Analyst

September 22, 2021 5:17 AM EDT
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Price: $610.09 +0.42%

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    33 Buy, 13 Hold, 0 Sell

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Shares of Adobe Systems (NASDAQ: ADBE) are down about 3% in pre-open Wednesday despite better-than-expected FQ3 results the company delivered.

Adobe earned $3.11 per share to beat the $3.01 expected from surveyed analysts. Revenue for the quarter came in at $3.94 billion versus the consensus estimate of $3.89 billion.

“We drove record revenues and strong profitability in the quarter, demonstrating our ability to succeed in a dynamic environment,” said John Murphy, executive vice president and CFO, Adobe. “Our operational rigor and data-driven insights enable us to execute while we continue to invest across massive market opportunities.”

For the ongoing quarter, ADBE projects EPS of $3.18 on revenue of $4.07 billion, higher than the consensus of $3.08 per share on sales of $4.04 billion.

Multiple Wall Street analysts have raised their price targets on Adobe following a “solid” quarter.

Goldman Sachs analyst Kash Rangan raised the price target to $765.00 per share from the prior $735.00 on the Buy-rated ADBE to reflect raised estimates.

“ADBE is (-4%) AH following 3Q21 results that likely missed Street expectations for net new Digital Media ARR (3% beat vs guide, vs 15% beat in 2Q21 vs 35% beat in 3Q20). However, we remain bullish as the smaller magnitude of the beat was largely driven by early summer seasonality amid vaccine effectiveness, and in our view, does not diminish the prospects for upside in 4Q,” Rangan said in a client note.

“We believe that Adobe is on track to grow revs 2x and even 3x from current levels over the next few years, entering the top ranks of software companies to reach $40bn+ of revenues. The unprecedented pace of digital transformation underpinning the Digital Experience business, the durable shift from paper to digital document management, and Creative Cloud TAM expansion amid the surge in video and content creation, give us incremental confidence in this potential,” he further added.

Cowen analyst J. Derrick Wood reiterated an Outperform rating and a $700.00 per share price target on Adobe.

“ARR upside was softer than past qtrs due to greater summer consumer seasonality but 4Q guide was nicely above Street & we view as conservative heading into the seasonally strong 4Q. Meanwhile, DX growth execution is on the upswing. Reiterate Outperform & we would be buyers of the pullback,” Wood said in a note sent to clients.

Stifel analyst Parker Lane raised the price target to $750.00 per share from the prior $725.00.

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