Adobe shares edge upward as analysts assess 'conservative' 2023 outlook
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Adobe (NASDAQ:ADBE) shares rose by as much as 3% Wednesday as Wall Street began to assess the media-software company's outlook for next year, and its $20B acquisition of online design company Figma.
Late Tuesday, Adobe (ADBE) used its Adobe Max Creativity Conference to say that for 2023, it expects to report earnings, excluding one-time items, of $15.15 to $15.45 a share, on revenue in a range of $19.1B to $19.3B. Adobe also reiterated its fourth-quarter earnings and revenue outlook.
With its 2023 outlook, Adobe Chief Executive Shantanu Narayen said the company is seeing "a massive market opportunity that will drive Adobe's next decade of growth."
Goldman Sachs analyst Kash Rangan, said Adobe (ADBE), which isn't on track to report its next quarterly results until December, may have set the tone for what to expect from other leading software companies with their upcoming reports and outlooks.
"We think Adobeâs guidance will be a precursor to software companies similar conservative guide for [2023] revenues and strong operating expense expectations," Rangan said, adding that such a scenario "should be initially well-received by investors."
Rangan has a buy rating and $475-a-share price target on Adobe's (ADBE) stock. As far as what could drive interest in Adobe (ADBE) among investors, Rangan said the Figma acquisition "could be transformative to the Adobe story with the potential for accelerating revenue and earnings growth starting in 2024."
At Jefferies, analyst Brent Thill also called Adobe's (ADBE) outlook "conservative" as its forecast was below prior expectations. Thill, maintained his buy rating on Adobe's (ADBE) stock, but trimmed his price target to $420 a share from $440.
Mizuho analyst Gregg Moskowitz said that even with its conservative outlook, Adobe (ADBE) "does remain well-positioned to benefit from digital transformation with its comprehensive end-to-end offering."
Earlier this month, speculation that Adobe (ADBE) could be in the sights of activist investors due to sentiment about the company's Figma acquisition plans.