Adobe reports Q4 earnings December 13

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What's Happening

Software giant Adobe ( ADBE ) reports fiscal fourth-quarter earnings December 13. The company reports after the market close with the consensus calling for earnings of $1.89 per share. ADBE is up 38% on the year.

Technical Analysis

ADBE was recently trading at $242.41 down $35.20 from its 12-month high and $71.98 above its 12-month low. InvestorsObserver's Stock Score Report gives ADBE an 85 long-term technical score and a 93 short-term technical score. The stock has recent support above $220 and recent resistance below $255. Of the 23 analysts who cover the stock 14 rate it Strong Buy, 1 rate it Buy, 8 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, ADBE gets a score of 78 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Adobe has done a great job converting its business to a cloud-based subscription model. The company has grown earnings 45% annually over the last five years and analysts expect additional growth of 33% per annum over the next five years. Adobe has a solid earnings track record with better than expected earnings and revenues in each of the last four quarters. The street expects another beat this quarter with a whisper number of $1.93. During the same period last year the company earned $1.26. Analysts remain upbeat on the stock and maintain an average price target of $290.79, suggesting the stock has an additional 21% upside potential.

Stock Only Trade

If you're looking to establish a long stock position in ADBE consider buying the stock under $242. Sell if it falls below $224 or take profits if it gets to $278.50.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 1/18/19 200/205 bull-put credit spread for a $0.40 credit. That's a potential 8.7% return (75% annualized*) and the stock would have to fall 15.6% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider an 1/18/19 285/290 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (75% annualized*) and the stock would have to rise 17.7% to cause a problem.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 1/18/19 $240 covered call. Buy ADBE shares (typically 100 shares, scale as appropriate), while selling the 1/18/19 $240 call for a debit of $228.16, per share. The trade has a target assigned return of 5.2%, and a target annualized return of 45% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com

This article appears in: Investing , Options
Referenced Symbols: ADBE

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