Adobe Systems Inc. (Nasdaq: ADBE) is trading 0.6% higher ahead
of the Company's first quarter earnings report, expected out after
the market close Tuesday.
Adobe is expected to report EPS of $0.57 on revs of $1.03 billion.
Last quarter, the Company posted EPS of $0.56 with revs of $1.008
billion, beating-out Street views calling for EPS of $0.53 and revs
of $988.07 million. Looking back to the first quarter of last year,
Adobe reported better-than-expected EPS of $0.45 and revs of $786.4
million.
Shares gained 21.6% through the quarter, to $34.50 at the end of
February. The stock is down 5.9% since then.
Adobe is trading at a forward P/E of 12.6x FY12 EPS estimates,
compared with 9.9x at Cisco Systems (Nasdaq: CSCO) and 13.5x for
Oracle (Nasdaq: ORCL).
Data from Bloomberg has 12 analysts with a Buy on Adobe, 15 with a
Hold, and none suggesting to Sell. The analyst price target average
is $37.60, with a high of $46.00 and low of $32.00. Shares have
traded in a range of $37.30 - $25.45 over the last 52-weeks.
Summary
Deutsche Bank is looking for EPS of $0.58 on revs of $1.032 billion
from Adobe. Deutsche notes that "checks suggest continuing traction
with CS5 and robust growth at Omniture...But with Japan accounting
for ~15% of revenue, business disruption during March is likely to
lead Adobe to guide 2Q modestly below consensus." Though shares are
trading at a 5% discount currently, Deutsche recommends that
investors buy on any signs of weakness following Q211 guidance.
Deutsche has a Buy on the shares, with price target of $43.
Wells Fargo expects Adobe to report EPS of $0.56 on revs of $1.021
billion. The firm notes that "checks show continued growth in large
deals for both CS5 and enterprise product lines based on strength
in year-end corporate budgets. But we expect muted guidance as four
quarters have elapsed since CS5 was released. The CS5 dot release,
which we expect could be released as early as next quarter, could
provide some upside to FY2011 revenue growth in our view. Adobe
continues to be a product cycle driven company and we expect most
investors to wait for the CS6 release expected before the
year-end.".
The firm thinks that Q211 guidance will be more muted due to
seasonality and the CS5 cycle winding down. Additionally, "Flash
continues to be an issue for investors though adds very little to
the topline. We continue to expect HTML5 and Flash to co-exist for
the time being with Flash used for gaming."
Wells Fargo has a Market Perform rating on the shares, with a
valuation range of $30 - $33.
Adobe is expected to release their first quarter earnings on
Tuesday, March 22, 2011, at approximately 4:00pm EDT. Stay tuned to
StreetInsider.com's
EPS Insider
section to see our analysis of the highly-anticipated quarterly
results within seconds of their release.