Adobe Analyst Frets Over Shaky Fundamentals Ahead Of Q4 Results: Retail Optimistic
By Stocktwits Inc | First Published Dec 11, 2024, 7:54 PM ISTCiti analysts said Adobe’s core business faces continued revenue leakage, exacerbated by inclement macroeconomic conditions and competitive threats.
San Jose, California-based Adobe Inc. ($ADBE), a provider of document processing software, services and tools, is scheduled to report its fiscal year 2024 fourth-quarter results after the market closes on Wednesday.
On average, analysts expect the company to report non-GAAP earnings per share (EPS) of $4.67 versus $4.27 a year ago and guidance of $4.63 to $4.68.
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Revenue is expected to rise 9.7% year-over-year (YoY) to $5.54 billion. The guidance issued in mid-September calls for revenue of $5.50 billion to $5.55 billion.
Third-quarter revenue was $5.41 billion, with $4 billion coming from the digital media segment and $1.35 billion from the digital experience segment. Net new digital media annualized recurring revenue (ARR) was $504 million and the company exited the quarter with Digital Media ARR of $16.76 billion.
Adobe's remaining performance obligations (RPO) at the end of the third quarter was $18.14 billion.
Citi analysts reduced the price target for Adobe stock from $616 to $590 on Monday and maintained a ‘Neutral’ rating, TheFly reported. The analysts said the core business faces continued revenue leakage, exacerbated by inclement macroeconomic conditions and competitive threats.
However, with a lower bar for fiscal 2025 ARR, the guidance could be in line, they said.
Adobe’s management will host an earnings call at 5 p.m. ET.
Sentiment toward Adobe stock improved from 'neutral' a day ago to 'bullish' (55/100), with message volume perking up to ‘high.’
A Stocktwits user sees existential risk for Adobe. “Everything Adobe makes will get replaced by AI code tools within 12 months,” they said.
A bullish user, however, suggested the stock is undervalued at current levels.
In premarket trading, as of 9:03 a.m. ET, Adobe shares rose 0.25% to $548.40. For the year, the stock is down 8.31%, grossly underperforming the Invesco QQQ Trust ETF ($QQQ), which is up about 28% for the same period.
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