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Adobe Inc. (ADBE), headquartered in San Jose, California, provides digital marketing and media solutions. Valued at $237.93 billion by market cap, the company offers a line of application software products, type products, and content for creating, distributing, and managing information. The software giant is expected to announce its fiscal third-quarter earnings for 2024 after the market closes on Thursday, Sep. 12.
Ahead of the event, analysts expect ADBE to report a profit of $3.63 per share on a diluted basis, up 11.4% from $3.26 per share in the year-ago quarter. The company beat the consensus estimates in three of the last four quarters while missing on another occasion. During the previous quarter, the company reported record revenue of $5.31 billion, driven by Adobe Creative Cloud, Document Cloud, and Experience Cloud. It repurchased approximately 4.6 million shares in Q2.
For the full year, analysts expect ADBE to report EPS of $14.69, up 14.8% from $12.80 in fiscal 2023.
ADBE stock has underperformed the S&P 500’s ($SPX) 19.5% gains over the past 52 weeks, with shares up 2.6% during this period. Similarly, it underperformed the S&P 500 Technology Sector SPDR’s (XLK) 20.7% gains over the same time frame.
Shares of ADBE rallied 25% in June after reporting better-than-expected Q2 results and raised its guidance for the full year. ADBE, like other software names, had underperformed in 2024, as some investors believed that they would pull back on software spending to experiment with artificial intelligence (AI). The company’s integration of AI into its products has driven its growth. Meanwhile, its generative AI model, Firefly, has seen solid uptake, helping increase Creative Cloud subscriber upgrades.
On Jun. 14, ADBE shares closed up more than 14% after it reported upbeat Q2 results. It reported Q2 revenue of $5.31 billion, better than the consensus of $5.29 billion. The company provided a Q3 digital media net new annual recurring revenue forecast of $460 million and raised its full-year revenue forecast to between $21.40 billion and $21.50 billion from a previous estimate of $21.30 billion to $21.50 billion. In Q2, its adjusted EPS increased 14.6% year over year to $4.48. Its revenue stood at $5.31 billion, up 10.2% year over year.
For Q3, the company expects its revenue to be between $5.33 billion and $5.38 billion and adjusted EPS to be between $4.50 and $4.55. Moreover, ADBE updated its full-year outlook and expects adjusted EPS to be between $18 and $18.20 and digital media net new ARR at $1.95 billion.
Analysts’ consensus opinion on ADBE stock is bullish, with a “Moderate Buy” rating overall. Out of 31 analysts covering the stock, 22 advise a “Strong Buy” rating, one suggests a “Moderate Buy” rating, six give a “Hold” rating, and two recommend a “Strong Sell.” The average analyst price target for ADBE is $613.60, indicating a potential upside of 14.3% from the current levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
