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Adobe (ADBE) Attains a New 52-Week High on Solid Earnings

Shares of Adobe Systems Inc. ADBE hit a new 52-week high of $98.00 on Mar 18, eventually closing at $93.42. The company returned 20.8% over the past one year and approximately 2.3% in the past three months. Average volume of shares traded over the last three months was roughly 3,734K.

What is Driving Adobe Systems?

One of the largest software companies in the world, Adobe Systems’ massive customer base provides it with a distinct competitive advantage. We believe that the company is being driven by continuous innovation in the Creative Cloud and Marketing Cloud businesses.

The recent price appreciation may be attributed to Adobe’s strong fundamentals, solid adoption of creative cloud and better-than-expected first-quarter fiscal 2016 results reported on Mar 17. Since then, the stock has gained 3.8%.

In fiscal first quarter, Adobe reported earnings of 52 cents per share, surpassing the Zacks Consensus Estimate of 47 cents. The growth came on the back of strong adoption of cloud that led to record Creative and Marketing Cloud revenues and better-than-expected Digital Media ARR (Annualized Recurring Revenue) growth.

Adobe’s revenues jumped 5.9% sequentially and 24.7% year over year to $1.38 billion. Revenues were above the guidance range of $1.300–$1.350 billion and the Zacks Consensus Estimate of $1.325 billion.

Apart from the innovation in its Creative suite businesses, the consistent adoption of the Adobe marketing cloud could serve as a potential catalyst, going forward. Moreover, Adobe’s continuous market expansion into new segments is bringing in new users.

It is also integrating Adobe Stock directly into the Creative Cloud service, thereby expanding its user base further. Other new offerings include, Adobe stock video, Adobe Post, a free mobile app that allows consumers to easily turn photos and texts into graphics and share those on social media, will drive growth, going forward. Also, the solid adoption of Document Cloud, a subscription package that enables users to sign documents on the cloud, will boost revenues.

Additionally, Adobe delivered an average positive earnings surprise of 9.05% over the trailing four quarters. The company’s solid market position, compelling product lines, strong revenue growth, continued innovation and strong long-term growth potential position it favorably.

Adobe Systems currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the technology sector are Blackbaud Inc. BLKB, NetSol Technologies, Inc. NTWK and Citrix Systems, Inc. CTXS. While Blackbaud and NetSol sport a Zacks Rank #1 (Strong Buy), Citrix carries a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CITRIX SYS INC (CTXS): Free Stock Analysis Report
 
ADOBE SYSTEMS (ADBE): Free Stock Analysis Report
 
BLACKBAUD INC (BLKB): Free Stock Analysis Report
 
NETSOL TECH INC (NTWK): Free Stock Analysis Report
 
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