Please ensure Javascript is enabled for purposes of website accessibility

Why Adobe Systems Incorporated Stock Popped Today

By Steve Symington - Oct 19, 2017 at 4:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The creative software leader touched a fresh all-time high after offering impressive guidance for the year ahead.

What happened

Shares of Adobe Systems Incorporated (ADBE 2.77%) were up 11.6% as of 3:30 p.m. EDT Thursday after the creative-software specialist provided strong fiscal 2018 guidance.

More specifically, during an investor meeting at its Adobe MAX user conference, Adobe revealed preliminary fiscal-year 2018 targets for total revenue to increase roughly 20% year over year, to $8.7 billion, assuming digital media segment growth of 23%, Adobe Experience Cloud subscription revenue growth of 20%, and Adobe Experience Cloud total revenue growth of 15%. On the bottom line, that should translate to GAAP earnings per share of approximately $4.40 and adjusted (non-GAAP) earnings per share of roughly $5.50.

By comparison, analysts' consensus estimates had predicted that Adobe would achieve fiscal 2018 adjusted earnings of only $5.21 per share on slightly lower revenue of $8.68 billion.

Adobe headquarters office.

IMAGE SOURCE: ADOBE SYSTEMS

So what

In addition, Adobe told investors that Adobe Experience Cloud bookings should climb around 20% next fiscal year. The company further believes it will simultaneously add roughly $1 billion of net new digital media annualized recurring revenue (ARR). For perspective, Adobe's total digital media ARR at the end of last quarter stood at approximately $4.87 billion.

Now what

Adobe also reaffirmed its latest fiscal fourth-quarter 2017 financial targets, which call for quarterly revenue of $1.95 billion, GAAP earnings of $0.86 per share, and adjusted earnings of $1.15 per share. Shareholders will need to wait for more color on Adobe's performance when it releases its final fiscal fourth-quarter results in mid-December. But given this encouraging update on Adobe's longer-term targets in the meantime, it's no surprise to see the company's stock hit a new all-time high today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Adobe Systems. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Adobe Inc. Stock Quote
Adobe Inc.
ADBE
$438.40 (2.77%) $11.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.