Why Did Adobe (ADBE) Stock Hit a New High on Wednesday?

Shares of Adobe Systems ADBE climbed over 2.2% to hit a new all-time high on Wednesday, roughly one week before the company is set to report its first-quarter fiscal 2018 earnings results.

With no big news to speak of, it seems that investors are simply showing their confidence ahead of the company's upcoming Q1 report-and with good reason. Before today's jump, shares of Adobe had skyrocketed nearly 77% over the last year and almost 23% in the last 12 weeks.

The recent confidence stems in part from the company's record-setting Q4. Adobe's revenues surged 25% year over year to hit $2.01 billion, while its full-year sales of $7.30 billion also marked a new high. Adobe also raised its fiscal 2018 guidance at the time.

Then, in late January, Adobe announced that the new Republican tax law would have a positive impact on the company and its investors. Adobe set a new 2018 revenue projection of $8.725 billion.

"The new Tax Act is lowering Adobe's effective tax rates, driving a significant increase in our earnings per share targets," CFO Mark Garrett said in statement. "With ready access to our offshore cash, we will continue to evaluate investment opportunities to grow our business and we are actively expanding our campuses in the Bay Area and Utah to accommodate the growth of our employee base."

These growth projections seem to be reflected in Adobe's current Q1 estimates. The San Jose, California-headquartered company is expected to see its earnings skyrocket 52% year over year, based on our current Zacks Consensus Estimates. On top of that, the company's first-quarter sales are projected to reach $2.04 billion, which would mark a 21.4% surge. For the current full year, Adobe's bottom line is expected to climb nearly 43% to hit $6.16 per share.

Adobe has also recently earned a large number of estimate revisions for its current quarter, next quarter, current year, and following year earnings, with 100% agreement to the upside. Investors should note that Adobe has matched or topped earnings estimates for 14 straight quarters, including a 9% average surprise in each of the trailing four periods.

On top of all of this, Adobe's EPS figure is expected to expand at an annualized rate of 16% over the next three to five years, which is solid for a company of its size and age. Adobe is currently a Zacks Rank #2 (Buy) and sports a "B" grade for Growth in our Style Scores system.

The creative software giant is expected to report its Q1 fiscal 2018 earnings results on Thursday, March 15.

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

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

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