Here's What Wall Street Experts Are Saying About Adobe Ahead Of Earnings

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Adobe (ADBE) is scheduled to report results of its second fiscal quarter after the market close on Thursday, June 16, with a conference call scheduled for 5:00 pm ET. What to watch for:
 

Questions Into Q2 Earnings:

In a research note ahead of the company’s quarterly results, Morgan Stanley analyst Keith Weiss said that clarity on three key points – the impact of Consumer exposure on Digital Media, sustainability of Digital Experience demand, and margin trajectory – are top of mind in second-quarter earnings. A return to Digital Media beats and increased stability in margins are likely required for Adobe’s shares to regain its prior multiple premium in Software GARP, the analyst contended. The analyst has an Overweight rating and a price target of $591 on the stock.

Also discussing the upcoming earnings report, Jefferies analyst Brent Thill told investors that his checks show limited pressures in the second quarter, but a worsening macro could impact the second half of 2022 and especially fiscal 2023. The analyst recently cut estimates to embed more recession risks, and his fiscal 2023 revenue is 2.4% below Street. That said, the valuation of 21-times near-term EV/EBITDA is near 20-times 5-year trough, and Adobe remains a high-quality long-term franchise with double-digit annual revenue growth and mid-40s op margins, Thill contended. The analyst has a Buy rating and a price target of $550 on the shares.

 

Target Price Cut Ahead Of Results: 

On Friday, Mizuho analyst Gregg Moskowitz lowered the firm's price target on Adobe to $530 from $600, while keeping a Buy rating on the shares ahead of the company's fiscal second-quarter results on June 16. Despite a higher level of macro uncertainty, Adobe channel checks "surprisingly were somewhat better this quarter," Moskowitz told investors in a research note. The analyst expects the company to report "solid upside" to Street estimates and likes the stock's risk/reward at current share levels. Moskowitz cut the target to reflect a material recent contraction in comp multiples.

Also keeping an Outperform rating on the name, Cowen analyst J. Derrick Wood lowered the firm's price target on Adobe to $550 from $600 as he previewed its second-quarter results. The analyst noted that his commercial partner survey showed slightly better performance in the second quarter versus the first quarter, but the 2022 outlook was slightly down-ticked. He expects modest upside and in-line guidance, which should be good enough given the weak sentiment.
 

Outlook: 

Back in March, when the company reported first-quarter results, Adobe said it saw second-quarter adjusted earnings per share of roughly $3.30, with consensus at $3.31, and revenue of about $4.34B, with consensus at $4.34B.