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Adobe Systems Incorporated (ABDE) FY16 Revenue and EPS Guidance Misses Consensus Estimates: Analysts Weigh In

By Christine Brown 

On October 6th, Adobe Systems Incorporated (NASDAQ:ADBE) had its Annual Analyst Day, in which it projected lower-than-consensus revenue (at $5.7 billion as opposed to estimates of $5.93 billion) and EPS  of $2.70, lower than estimates of $3.21, for fiscal 2016. Following the announcement, Jefferies and Credit Suisse weighed in.

On October 7th, Brad Zelnick from Jefferies maintained a Buy rating on the stock with a price target of $92. According to the Fly, Zelnick says the guide-down is “defensible” in light of currency movements and higher subscription adoption across the company’s portfolio. However, the analyst has expressed surprise on the 15% increase in the company’s operating expenses for FY16, which is compounded through FY18. On the positive side, Zelnick expects “revenue growth to outpace expense growth.”

Brad Zelnick has a 55% success rate recommending stocks with a +9.3% average return per rating when measured over a one-year horizon and no benchmark.

On the other hand, analyst Philip Winslow of Credit Suisse reiterated a Neutral rating on the stock and cut his price target from $75 to $65 citing his belief that the company has less room for growth moving forward. Winslow explained, “Although management suggested that another 8.3 million Creative Suite users have yet to convert (implying an installed base of 16.9 million), Adobe had stated that its Creative installed base equaled 12.8 million at its Financial Analyst Meeting in 2013… Therefore, although we believe that Adobe can achieve its revenue CAGR targets through FY2018, further growth beyond these levels will be predicated on sustained adoption of the Creative Cloud Photography Plan by non- traditional hobbyist users, which is a more difficult market to estimate.”

Philip Winslow has a 56% overall success rate recommending stocks with a +6.4% average return when measured over a one-year horizon and no benchmark.

According to TipRanks, of the 10 analysts who have recently rated Adobe’s stock, 7 have rated it as Buy, while 3 have rated it as Hold; none of the analysts have recommended to Sell the stock. The average consensus price target for Adobe’s stock, based on ratings of the 10 analysts over the past 12 months, is $91.22, an upside of about 13% over current levels.