Analysts raise numbers on Adobe after a ‘clean finish’ to the year By Investing.com

By Senad Karaahmetovic

Shares of Adobe Systems (NASDAQ:) are trading up more than 4% in pre-open Friday after the software company reported better-than-expected earnings for its fiscal fourth quarter.

Adobe adjusted EPS of $3.60 per share, beating the analyst consensus of $3.50 per share. Revenue rose 10% year-over-year to $4.53 billion, which is in line with the average analyst estimate. Adobe said its subscription revenue increased 11% YoY to $4.23B.

Digital media revenue increased by 9.6% to a record $3.30B with the net new annualized recurring revenue (ARR) for Digital Media coming in at $576 million.

“Adobe drove record revenue and operating income in fiscal 2022,” commented Shantanu Narayen, chairman and CEO of Adobe. “Our market opportunity, unparalleled innovation, operational rigor and exceptional talent position us well to drive our next decade of growth.”

For this quarter, Adobe is looking to record adjusted EPS of $3.65-3.70 on revenue of $4.60B-4.64B. Analysts were looking for adjusted EPS of $3.65 on revenue of $4.65B.

For FY2023, revenue is seen in the range of $19.1B-19.3B while adjusted EPS is seen between $15.15 and $15.45.

Adobe added that the regulatory process pertaining to the Figma deal is “proceeding as expected.”

Stifel analysts said Adobe delivered a “solid” and “clean” finish to its fiscal year. They raised the price target to $400 on Buy-rated Adobe stock.

“As we turn the page to next year, we believe investors will remain focused on the regulatory approval process for the Figma acquisition, and the potential impact to the model and product roadmap once the deal has been completed later in the year,” the analysts wrote.

Morgan Stanley analysts also hiked the price target as they went to $382 from $337 per share. They also took note of a “solid” print, highlighted by a 5% beat in Digital Media net new ARR.

“Including Figma (which isn’t yet in our published estimates), we believe Adobe can return to a high-teens EPS growth rate (in the year post the acquisition),” the analysts said.