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Investing.com - TD Cowen has maintained its Hold rating and $470.00 price target on Adobe (NASDAQ:ADBE) ahead of the company’s third-quarter earnings report scheduled for September 11. According to InvestingPro data, Adobe currently trades at $349.17, with analysts’ targets ranging from $280 to $605, suggesting significant potential upside based on the consensus Fair Value model.
The research firm noted mixed results from its partner survey, with positive third-quarter response dynamics but mixed commentary regarding outlook and new products. Third-party credit card data showed softness, with growth of 5% in the third quarter compared to 6% in the previous quarter and 10% in the same period last year. Despite this slowdown, Adobe maintains impressive fundamentals with an 89.25% gross profit margin and revenue of $22.6 billion in the last twelve months.
TD Cowen identified pricing as a potential tailwind for Adobe but suggested AI Search developments could create headwinds for top-of-funnel traffic. The firm expects Adobe to deliver a marginal beat on third-quarter results with in-line guidance.
Adobe’s previous second-quarter performance included a modest beat and raised guidance. The Digital Media revenue growth of 12% at constant currency exceeded TD Cowen’s 11% estimate, while Digital Experience subscription revenue growth of 11% at constant currency surpassed the firm’s 10% estimate.
The company’s second-quarter operating margin reached 45.5%, above the Street expectation of 45.2%, with gross margin remaining flat quarter-over-quarter. Management had indicated that standalone AI products were tracking ahead of target for approximately $250 million by year-end, representing about 1.1% of revenues. InvestingPro analysis reveals Adobe as a prominent player in the Software industry, with strong shareholder returns through aggressive share buybacks. Subscribers can access 12 additional ProTips and comprehensive financial metrics in the Pro Research Report.
In other recent news, Adobe is preparing to announce its third-quarter earnings, with RBC Capital and Mizuho both maintaining an Outperform rating on the company’s stock. RBC Capital has adjusted its price target to $430, anticipating solid results in the upcoming earnings report. Mizuho also lowered its price target to $460, citing mixed signals with strong enterprise activity but challenges in web traffic growth. Meanwhile, UBS has reduced its price target to $400, maintaining a Neutral rating due to perceived AI-related risks. Rothschild Redburn has reiterated a Sell rating with a $280 price target, expressing concerns over competition from Google’s AI tools potentially impacting Adobe’s core products. Despite these varied assessments, RBC Capital remains optimistic, reiterating its $480 price target and acknowledging the growing competition in the creative tools market. These developments reflect the diverse perspectives of analysts as Adobe navigates market challenges and opportunities.
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