Adobe CEO Shantanu Narayen speaks in an interview with CNBC at the New York Stock Exchange on February 20, 2024.
Brendan McDermid | Reuters
shares adobe Shares fell more than 9% on Friday, a day after the software company’s announcement. Third quarter results This provided guidance for the fourth quarter that was worse than expected.
Adobe reported revenue of US$5.41 billion in the quarter, an increase of 11% year-on-year, higher than the US$5.37 billion expected by LSEG analysts. The company’s net profit for the period was $1.68 billion, or $3.76 per diluted share, up from $1.4 billion, or $3.05 per share, in the same period last year.
Adobe said it expects fourth-quarter revenue to be between $5.5 billion and $5.55 billion, and earnings per share to be between $4.63 and $4.68. Analysts surveyed by London Stock Exchange Group (LSEG) expected sales of $5.61 billion and earnings per share of $4.67.
Goldman Sachs analysts reiterated a buy rating and $640 price target on the stock. They said they believed Adobe’s disappointing outlook obscured the strength of its core business, adding that the adoption of artificial intelligence was driving the business and that its key growth drivers “remain unchanged.”
“While investors may be concerned about the impact of the guidance on the upcoming DM FY25 guidance and are hesitant about the maturity of our business, we believe this reaction exaggerated.
Analysts at Bank of America said Adobe’s reported results and outlook were somewhat mixed but overall healthy.
They say Adobe is driving a “meaningful generation of artificial intelligence” and believe it is the only other company Microsoft Do this “on a massive scale at this point in the cycle.”
“Our positive view on Adobe has not changed,” they wrote in a note on Friday. “While we expect a better outlook for digital media in the fourth quarter, our forecast for fiscal 2026 remains higher due to more balanced strength in Creative Cloud and Document Cloud.”
Analysts at UBS said Adobe’s fourth-quarter outlook was “not encouraging,” but the sell-off seemed overdone.
“In our opinion, this print is not a disaster,” they wrote on Friday.
— CNBC’s Michael Bloom and Kif Leswing contributed to this report.
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