Adobe Systems ( ADBE ) stock received at least six price-target hikes on Friday after the digital media and marketing software firm posted better-than-expected fourth-quarter results and gave an upbeat outlook for its fiscal 2018.
KeyBanc Capital Markets analyst Brent Bracelin was the most bullish of the group. He raised his price target on the IBD 50 stock to 220 from 216 and reiterated his overweight rating.
"Adobe reported another solid quarter with upside driven by 25% revenue growth as the marketing cloud segment recovered nicely this quarter," Bracelin said in a note to clients. "Even more impressive, in our view, was the 40.2% operating margin, the highest since early 2008."
Adobe earned an adjusted $1.26 a share, up 40% year over year, on sales of $2.01 billion, up 25%, in the quarter ended Dec. 1 . Analysts expected earnings of $1.15 a share on sales of $1.95 billion, according to Zacks Investment Research.
For fiscal 2018, Adobe expects to earn an adjusted $5.50 a share, up 28% year over year, on revenue of $8.725 billion, up 20%. Analysts were modeling earnings of $5.47 a share on sales of $8.69 billion, Zacks said.
Adobe shares were flat, near 175, in mid-morning trading on the stock market today . Earlier in the session, Adobe was up as much as 2.8% to 179.98. Adobe notched a record high of 186.27 on Nov. 28.
IBD'S TAKE:Adobe Systems stock is currently ranked No. 28 on the IBD 50 list of top-performing growth stocks.
Adobe's media software business, which includes Creative Cloud and products like Photoshop and Illustrator, accounted for 69.3% of its revenue in the fourth quarter. Its digital marketing business accounted for 28.5% of sales, with print and publishing making up the rest.
"We believe Adobe stands out as one of the better-positioned cloud software leaders entering 2018, uniquely positioned to potentially deliver 20%-plus revenue growth," Bracelin said.
Adobe is benefiting from its partnership with Microsoft ( MSFT ) to cross-sell Adobe's Experience Cloud products with Microsoft's Azure cloud platform, Rosenblatt Securities analyst Marshall Senk said in a report. Senk rates Adobe stock as buy with a price target of 185.
Adobe now has more than 50 enterprise customers who are using its joint solutions with Microsoft, Adobe Chief Executive Shantanu Narayen said on a conference call with analysts late Thursday.
Adobe Chief Financial Officer Mark Garrett said the company is well positioned for a strong 2018, thanks to the one-two punch of its digital media and digital marketing businesses.
"Looking ahead, what we see are two markets that are providing tailwinds for our businesses," Garrett told Investor's Business Daily. Companies want to be more creative in their marketing and have a more personalized experience for customers, he said.
While rivals address the digital marketing business using customer relationship management software, Adobe ties its marketing systems together with its content creation businesses, Garrett said.
"There are a lot of companies out there that are just now getting started on digital transformation," Garrett said. "On the marketing side, it's still early days,"
Adobe will be looking to make acquisitions in its current fiscal year to bulk up its marketing solutions business, he said.
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