Adobe Systems Incorporated Crushes Q3 Earnings (ADBE)

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If you’ve waited for a better entry point before buying Adobe Systems Incorporated (NASDAQ:ADBE) shares, good luck with that. A flash crash is not happening. The software giant crushed Wall Street’s earnings expectations Tuesday, sending ADBE stock soaring as much as 5% in the after-hours session.

Adobe Systems Incorporated ADBE stockReally, it seems Adobe stock has only just begun to climb.

Thanks to the top- and bottom-line third-quarter beat on Tuesday, ADBE is seeing its estimates rise for the current quarter and full year. Adobe’s third-quarter revenue, which climbed 20% year over year, grew for the 11th straight quarter. Plus, sales from the digital media business, which houses Creative Cloud, soared some 39%. And if the CEO’s comments serve as indication, Adobe sees no sign of slowing down.

From President and CEO Shantanu Narayen:

“We drove strong revenue and earnings performance in Q3, further distancing ourselves from our competitors. Our leadership in cloud-based content and data platforms make us a mission critical partner to the world’s biggest brands as they transform how they engage with their customers.”

This makes ADBE stock — which has risen 7.11% year to date — a must-own equity.

A Look Ahead at ADBE

Adobe closed during the regular session Tuesday at $100.62. The stock has a consensus buy rating and an average analyst 12-month price target of $112. While that implies a 12% premium from Tuesday’s close, ADBE stock is poised to reach that level within a few weeks.

The fact that ADBE stock reached almost $106 in Wednesday’s premarket trade puts shares at less than 6% away from its consensus price target. This means Wall Street analysts will have no choice but to keep upgrading Adobe. Given the projected growth rate, expect analysts to upgrade the stock to fair value at around $120 to $125, which means ADBE stock can yield some 25% gains in the next 12 to 18 months.

Not convinced? Adobe forecasts fiscal 2016 revenue to be in the range of $5.8 billion to $5.85 billion, suggesting better than 20% Digital Media segment revenue growth year-over-year. Adobe also sees Digital Media annualized recurring revenue of $4 billion, up 20% YOY, while Marketing Cloud revenue growth is expected to rise at 30%.

In other words, Adobe is delivering the growth that the ADBE stock is priced for.

So despite the fact that Adobe is poised to reach all-time highs today, it’s only in the early innings. Buy ADBE stock on this rip, and don’t even wait for a dip.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/adobe-systems-incorporated-adbe-stock-q3-earnings/.

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