Investors are as nervous as ever, but they've shifted their focus away from soaring interest rates toward their potential impact on the economy. Even as bond yields have reversed course and fallen sharply as market participants begin to anticipate a potential recession, stock indexes have moved lower. Futures contracts on major market benchmarks were down as much as 1% early Friday morning.
There are some stocks, however, that managed to post gains even in the gloomy market environment. Adobe (ADBE 1.45%) released its financial results for the most recent quarter late Thursday, and shareholders were generally pleased with what they saw from the creative technology specialist. However, those gains paled in comparison to what investors in Maxar Technologies (MAXR) enjoyed early Friday. Read on to learn more about both of these companies and why they're doing well.
Adobe powers its digital business higher
Shares of Adobe were higher by 5% in premarket trading Friday morning. The software company posted record sales for the fiscal fourth quarter that ended Dec. 2 and saw strong results for its digital software tools.
Adobe reported quarterly revenue of $4.53 billion, rising 10% year over year and hitting a new high. That concluded a fiscal year in which Adobe saw $17.61 billion in sales, which was 15% higher than in fiscal 2021. Quarterly adjusted net income was $1.68 billion, working out to $3.60 per share in adjusted earnings. Adobe still has plenty of business left in its pipeline as well, as remaining performance obligations came in at $15.19 billion, for nearly a year's worth of future sales.
Both of Adobe's key segments generated solid growth. The digital media business had sales gain 10% year over year, driven by 16% growth in Adobe's Document Cloud product line. Moreover, annualized recurring revenue for the segment rose to nearly $14 billion. Meanwhile, Adobe's digital experience segment had a 14% sales increase, with the unit bringing in more than $1 billion in subscription revenue in its own right.
For 2023, Adobe has high hopes, projecting sales of $19.1 billion to $19.3 billion and earnings of $15.15 to $15.45 per share. Some investors have worried that 2022's share-price decline for the software stock could continue into 2023, but in the long run, Adobe appears to have solid business prospects that should persist well into the future.
Maxar makes a deal
Yet the biggest gains came for investors in Maxar Technologies, whose shares skyrocketed 120% in premarket trading. The space solutions and geospatial intelligence specialist received a generous buyout bid from an institutional investor that expects to take the business private.
Advent International made an agreement to purchase Maxar in an all-cash transaction that values the company at $6.4 billion. Under the terms of the deal, Advent would pay $53 per share to Maxar shareholders for their stock, which is 129% higher than Maxar's closing share price on Thursday. It's also 34% higher than the 52-week high for the company.
For Advent, taking Maxar private will add to its already impressive track record of investing in defense and security-related businesses. Meanwhile, Maxar will benefit from the financial resources and operational expertise that Advent brings to the table. In particular, with the ongoing rollout and launch schedule for Maxar's Legion satellite constellation, Advent hopes to accelerate implementation and look for other potential add-on acquisitions to further boost its capabilities.
Even with what appears to be a premium price, though, the $53-per-share offer values the stock at a 30% discount to its highs back in the mid-2010s. For long-term Maxar investors, that might be a bitter pill to swallow, even though those who bought into the space stock more recently will be happy with their big payday.
