Adobe Systems (ADBE) Stock | Weak Market Weighs On Earnings Beat


Adobe Systems Inc. (NASDAQ: ADBE)


Earnings Report

Adobe Systems (ADBE) announced earnings Thursday after the market closed that beat analyst expectations and gave the shares a boost after the open the following day. Earnings came in at 54 cents a share versus 50 cents estimated by analysts and revenues came in at $1.22 billion versus the $1.21 billion predicted by analysts polled by Thomson Reuters. The company said the results were driven by strong Creative Cloud adoption and record Marketing Cloud products and services revenue, however, the company also released guidance for the current quarter that is below what Wall Street analysts were targeting. Adobe said they are looking at a 59 cent earnings per share on sales of $1.3 billion, slightly less than analyst expectations of 64 cents per share on $1.36 billion in sales.

CEO and President Shantanu Narayen had this to say about the earnings release,

“Adobe delivered strong results in Q3 with revenue of $1.218 billion and non-GAAP earnings per share of $0.54. Strong Creative Cloud adoption and record Adobe Marketing Cloud revenue drove these results. In Digital Media, Creative Cloud has become the de facto platform for all creatives, providing the tools and services to fulfill every creative need. We’re migrating customers from our Creative Suite installed base, as well as attracting new users with strong adoption across our individual, team, and enterprise offerings. Net new Creative Cloud subscriptions grew by during 684,000 during Q3, and we exited the quarter with over 5.3 million subscriptions.” TheStreet

Adobe released their earnings on the same day the Fed had the big announcement that they weren’t going to raise interest rates, which initially sent shares soaring but by the end of the day the market was in the red; today was followed by more selling in the overall market as the DOW was down over 250 points most of the day. Adobe’s earnings were great even though the guidance was slightly lower than expected but I still see this company as a great investment for the long run.


ADBE Technicals

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The initial reaction to Adobe’s earnings sent shares down about 4 points where it leveled off until the open the next day where shares skyrocketed over 6 points in the first 10 minutes of trading. This was a great fade trade as the market was weak and the stock was way over extended moving up that fast. After hitting highs of $84.95 in the first ten minutes of trading, shares steadily sold off for the rest of the day before closing at $81.25. Looks like there will be support at $77.50, $78 and of course at the 200d moving average, which is currently sitting at 77.27. Resistance will come in at $81.50 and $84.50.

Looking at the bigger picture you’ll see on the daily that ADBE has been a strong performer, trading most of the year above the 200d moving average and maintaining a strong trend north. ADBE opened up the year at $72.70 and reached highs of $87.25 back in mid August before selling off all the way to $71.33 on the market correction. After the close today of $81.25, ADBE is up just shy of 12% on the year and looks like it has plenty of potential for further upside.


Company Profile

Adobe Systems, Inc. provides digital marketing and digital media solutions. The company operates its business through three segments: Digital Media, Digital Marketing, and Print and Publishing. The Digital Media segment offers creative cloud services, which allow members to download and install the latest versions of products, such as Adobe Photoshop, Adobe Illustrator, Adobe Premiere Pro, Adobe Photoshop Lightroom and Adobe InDesign, as well as utilize other tools, such as Adobe Acrobat. This segment also offers other tools and services, including hobbyist products, such as Adobe Photoshop Elements and Adobe Premiere Elements, Adobe Digital Publishing Suite, Adobe PhoneGap, Adobe Typekit, as well as mobile apps, such as Adobe Photoshop Mix, Adobe Photoshop Sketch and Adobe Premiere Clip that run on tablets and mobile devices. The Digital Media serves professionals, including graphic designers, production artists, web designers and developers, user interface designers, videographers, motion graphic artists, prepress professionals, video game developers, mobile application developers, students and administrators. The Digital Marketing segment offers various solutions, including analytics, social marketing, targeting, media optimization, digital experience management and cross-channel campaign management, as well as premium video delivery and monetization. This segment also offers legacy enterprise software, such as Adobe Connect web conferencing platform and Adobe LiveCycle. The Print and Publishing segment offers legacy products and services for eLearning solutions, technical document publishing, web application development and high-end printing. Adobe Systems was founded by Charles M. Geschke and John E. Warnock in December 1982 and is headquartered in San Jose, CA. MarketWatch