Adobe’s 4Q Results Beat Estimates; Top Analyst Says Buy

Adobe reported stronger-than-expected 4Q results, thanks to its double-digit growth in its sales and earnings. In addition, the digital media and marketing software maker’s FY21 outlook also surpassed the Street’s estimates.

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Adobe’s (ADBE) 4Q revenues increased 14% to $3.42 billion year-on-year and exceeded analysts’ expectations of $3.36 billion. Its adjusted earnings jumped 22.7% to $2.81 per share and beat the Street consensus mark of $2.66.

“Adobe delivered record Q4 and FY20 revenue performance amidst an unprecedented macroeconomic environment,” the company’s CEO Shantanu Narayen said. “As the undisputed leader in three growing categories – creativity, digital documents and customer experience management – we are well-positioned to capture the massive market opportunity ahead of us in 2021 and beyond.”

For 1Q, the company forecasts revenues and adjusted earnings of $3.75 billion and $2.78 per share, respectively. The consensus estimates are pegged at $3.51 billion and $2.60, respectively. (See ADBE stock analysis on TipRanks).

As for fiscal 2021, it projects total revenue of $15.15 billion compared to analysts’ estimates of $14.78 billion. Meanwhile, it projects adjusted earnings to be $11.20 per share compared to Wall Street’s estimates of $11.11.

Following its earnings release, Oppenheimer analyst Brian Schwartz reiterated a Buy rating and a price target of $550 (15.3% upside potential). In a note to investors, Schwartz wrote, “As Adobe helps digitally transform worldwide businesses of all sizes by modernizing and re-envisioning customer engagement and experiences, Adobe successfully spans its market in a way that arguably only Salesforce, Microsoft, and Oracle have achieved.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 16 Buys and 3 Holds. The average price target stands at $559.83 and implies upside potential of about 17.4% to current levels. Shares have rallied 44.6% year-to-date.