Adobe Stock Drops Despite Beat-And-Raise Quarterly Report

Digital media and marketing software firm Adobe (ADBE) late Tuesday beat Wall Street’s targets for its fiscal third quarter and guided modestly higher for the current period. But ADBE stock fell in extended trading.


The San Jose, Calif.-based company earned an adjusted $3.11 a share on sales of $3.94 billion in the quarter ended Sept. 3. Analysts expected Adobe earnings of $3.01 a share on sales of $3.89 billion, according to FactSet. On a year-over-year basis, Adobe earnings rose 21% while sales climbed 22%.

For the current quarter, Adobe expects to earn an adjusted $3.18 a share on sales of $4.07 billion. Analysts were modeling Adobe earnings of $3.08 a share on sales of $4.04 billion for its fiscal fourth quarter. In the year-earlier period, Adobe earned $2.81 a share on sales of $3.42 billion.

“Adobe had another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world,” Chief Executive Shantanu Narayen said in a news release.

Adobe has three cloud computing businesses. Its largest, Creative Cloud, includes software for creative professionals such as Photoshop and Illustrator. Document Cloud includes its Acrobat and e-signature offerings. Experience Cloud provides marketing software and services.

ADBE Stock Called A ‘Crown Jewel’

In after-hours trading on the stock market today, ADBE stock dropped 3.8%, near 621.50. During the regular session Tuesday, ADBE stock rose 0.7% to 645.89.

On Monday, Wells Fargo Securities analyst Michael Turrin initiated coverage of ADBE stock with an overweight, or buy, rating. He set a price target of 770 on ADBE stock.

“We view Adobe as one of the crown jewels of software,” Turrin said in a note to clients. He cited the company’s solid positioning as the “de facto toolkit for creatives” and tailwinds tied to digital experiences.

He recommends Adobe “as a long-term core holding in any large-cap tech portfolio.”

Adobe Partners With PayPal On Payments

On Sept. 15, Adobe announced that it will add payment services to its e-commerce platform this year to help merchants accept credit cards and other ways of paying. The move will deepen Adobe’s rivalry with e-commerce firm Shopify (SHOP).

For the service, Adobe has partnered with PayPal (PYPL), which will process a variety of payment types, including credit and debit cards as well as PayPal’s own payment and buy-now-pay-later offerings.

On June 11, ADBE stock broke out of a 40-week consolidation period at a buy point of 536.98, according to IBD MarketSmith charts. It notched a record high of 673.88 on Sept. 3.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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