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Here's what analysts had to say about Adobe's latest earnings

Published 06/14/2024, 07:28 AM
© Reuters.

Investing.com -- Adobe (NASDAQ:ADBE) raised its annual earnings guidance after the Photoshop-maker posted better-than-expected second-quarter results, sending shares in the California-based firm surging by over 14% in premarket trading.

For the three months ended May 31, Adobe reported adjusted earnings of $4.48 a share on revenue of $5.31 billion. Analysts polled by Investing.com had forecast $4.39 and $5.29 billion, respectively.

"Our highly differentiated approach to [artificial intelligence] and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users," said CEO Shantanu Narayen in a statement.

Adobe has been pushing to develop its AI capabilities to entice customers, many of whom are creative professionals that use its products like Premiere Pro and After Effects. The effort helped boost its quarterly net new digital media annual recurring revenue -- a key top-line measure -- above Wall Street expectations to $487 million.

Adobe is now predicting that full-year earnings per share will be between $18.00 and $18.20, while revenue is projected in a range of $21.40 billion to $21.50 billion. It had previously forecast per-share income of $17.60 to $18.00 and revenue of $21.30 billion to $21.50 billion for its 2024 fiscal year.

Here's a look at how analysts are reacting to Adobe's results.

Analysts at JPMorgan raised their rating of Adobe to "Overweight" from "Neutral," saying: "We see numerous product catalysts building into the [second half] and beyond."

Evercore ISI: "In aggregate, both the [second-quarter] results and upbeat [20]24 guidance helps create greater confidence in the durability of the Creative business and Adobe’s ability to infuse [generative] AI into its services and monetize the technology across the base."

Morgan Stanley: "Against a backdrop of weak software prints generally in [the first quarter of the 2024 calendar year] and rising competitive concerns around Adobe specifically, a solid set of fundamentals should put wind back in [Adobe]'s sails."

Citi: "It was a low bar, but [Adobe]’s [May quarter] results were perhaps the strongest we’ve seen in software this reporting season."

Wolfe Research: "[Adobe] delivered the quarter we were looking (hoping) for, beating and raising across all key metrics. After a noisy [first quarter], we think [the second quarter] starts to quiet the doubters and ease concerns around competition, disruption, and saturation."

Stifel: "With significant growth in influence within the front office over the last decade, we believe Adobe’s transition to a subscription-based, cloud delivery model in its core services – Creative Cloud, Document Cloud, and Experience Cloud – has provided an easier onboarding process and a more comprehensive platform that is attractive to enterprises shifting away from legacy solutions."

BMO Capital Markets: "Adobe had a more upbeat tone on the economic environment and generative AI adoption than other areas of software."

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