Adobe shares its downside with a bad orientation, but analysts on the sell side are less worried (NASDAQ: ADBE)

Actions of Adobe Inc. (NASDAQ: ADBE) were down on Friday after the cloud computing software company posted disappointing forecasts for the second quarter, but sell-side analysts seemed less worried.

Reactions have been mixed, with some reminding investors that Adobe's core business is good and that continued growth is expected. The new outlook, however, has led to a deterioration on the part of KeyBanc.

This decline occurred despite Thursday's release of positive first quarter results, during which Adobe posted better and worse results than expected. Adobe's first quarter profit of $ 1.71 per share outperformed Wall Street estimates. The company recorded record sales of $ 2.6 billion, exceeding analysts' expectations.

Adobe's forecast of $ 1.77 earnings per share for the second quarter was below Street's expectations of $ 1.88, and revenue forecasts of $ 2.7 billion were slightly lower than consensus expectations of 2 , 72 billion USD.

Analysts

• Brent Bracelin, an analyst at KeyBanc Capital Markets, downgraded Adobe from the overweight to sector weighting.
• Philip Winslow, a Wells Fargo analyst, reiterated Market Perform's assessment of the stock with a $ 250 price target.
• Richard Davis of Cannacord Genuity maintained the purchase price of the title but raised his price target from $ 290 to $ 300.
• Ken Wong of Guggenheim maintained a neutral rating on Adobe with a $ 275 price target.
• Daniel Ives of Wedbush maintained his neutral rating and his course goal at $ 270.

Adobe shares fell 4.3% Friday morning to $ 256.11 per share.

Theses

KeyBanc

Bracelin noted the good performance of Adobe in the last quarter, but was downgraded to balance the risk / return ratio.

"We maintain a favorable view of ADBE as a leading cloud investment, with high margins and healthy growth, but we see few short-term catalysts to justify further growth in annual recurring revenue growth. in good health but in deceleration, "wrote Bracelin.

Wells Fargo

Although Adobe has posted solid results across its entire portfolio, investor expectations have also increased. Winslow said he questioned whether "good enough" growth will be good enough for investors.

Genuity Cannacord

"Will Adobe get lost?" Davis asked. "Maybe, but we think it's very unlikely in a horizon of at least three years."

Davis believes that Adobe has the strongest franchise in marketing marketing.

Guggenheim

Wong noted that investors were probably confused about Adobe's results because of a change in accounting that added to the outlook for the year after a strong start to the year.

Mr. Wong also reminded investors that he was confident that the revenue from his Digital Experience business would increase by 25% with two recently acquired companies, the open-source Magento e-commerce platform and the marketo software company. operating "at or above the plane".

Wedbush

Mr Ives asked investors not to lose sight of the strong execution of Adobe's management, which, he said, "has helped to move from a legendary model, passing from its original roots of licenses to a perfectly irreproachable subscription activity ". the company well.

"In our opinion, there is still fuel for the company in 2019, as new customer acquisitions from all of its offerings have gained further strength this quarter and emerging markets continue to grow while business deployments continue to grow. from Creative Cloud remain robust, "Ives wrote.

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