Adobe CEO Shantanu Narayen speaks throughout an interview with CNBC on the New York Inventory Change in New York Metropolis, February 20, 2024.
Brendan Mcdermid | Reuters
Shares of Adobe closed down greater than 8% on Friday, a day after the software program firm introduced third-quarter outcomes that supplied a worse-than-expected outlook for the fourth quarter.
Adobe reported income of $5.41 billion for the quarter, up 11% yr over yr and above the $5.37 billion analysts anticipated, in line with LSEG. The corporate’s internet earnings for the interval was $1.68 billion, or $3.76 per diluted share, in comparison with $1.40 billion, or $3.05 per share, in the identical interval a yr in the past.
For the fourth quarter, Adobe expects income between $5.50 billion and $5.55 billion, and earnings per share between $4.63 and $4.68. Analysts polled by LSEG anticipated income of $5.61 billion and earnings per share of $4.67.
Goldman Sachs analysts reiterated their purchase score and $640 value goal for the inventory. They stated they imagine Adobe’s disappointing prospects overshadowed the power of its core companies, including that the corporate is being strengthened by the adoption of synthetic intelligence and that its key development engines “stay intact.”
“Whereas traders are seemingly involved concerning the influence of the steerage on the upcoming DM FY25 steerage and hesitant about the place we’re within the firm’s maturity, we imagine this response is overdone,” they wrote in a word on Friday.
Analysts at Financial institution of America stated Adobe reported outcomes and steerage that had been considerably combined however usually wholesome.
They stated that Adobe is driving “significant AI technology,” they usually argued that it’s the solely firm on the market Microsoft doing so “at scale at this level within the cycle.”
“No change in our constructive view of Adobe,” they wrote in a word on Friday. “Whereas we had been hoping for a greater outlook for digital media within the fourth quarter, our FY26 estimates are nonetheless increased based mostly on a extra balanced power of artistic cloud and doc cloud.”
UBS analysts stated Adobe’s fourth-quarter outlook is “uninspiring” however the sell-off seems overdone.
“In our eyes, the image was hardly a catastrophe,” they wrote on Friday.
— CNBC’s Michael Bloom and Kif Leswing contributed to this report.
