If Adobe can continue to add 300 million in ARR a quarter, Adobe should hit $150 a share in 2017 anything higher and they will hit $200
Today's earnings report didn't offer any motivation for stock appreciation. Earnings was a few cents above expectations. Revenue was in line. Next quarter revenue was below expectations. For full year, both earnings and revenue were guided below expectations. This despite the earnings beat this Q and the penny guide up for next Q. It's hard to imagine how bullish analysts will raise their price targets from the $110-$120 range.
At the same time, I don't expect the stock to crater. The earnings report wasn't too bad. Valuation also isn't too bad. P/E of around 33 based on 2017 estimates. PEG of about 1. It may open down a bit but it shouldn't fall too much. It may even end up closing slightly green.
The only wild card would be an unexpected upgrade or downgrade. With these types of earnings, you really don't expect to see either.
The stock has seen more aggressive next-day percentage closing levels following 26 of its last 49 earnings-driven after-hours moves. The near-term pattern favors reversals, in 10 of the last 16 quarters. Looking deeper into the performance data, shorts may want to be cautious on this one as the stock has recorded downside after-hours trade following 21 of the quarters we’ve tracked. It narrowed or reversed that after-hours downside move in the following regular session in 11 of those events, or 52% of the time.
Sentiment: Strong Buy
Adobe is also a lot more profitable than any analyst predicted, Dougherty & Co.’s Robert Mattson predicted 68 cents on 1.42 billion in revenues, ADBE did 71 cents on 1.4 billion. Revenue short fall was only 400k, hopefully they can fix this next quarter with a beat with extra marketing since profits are exploding.