Adobe Shares Jump as Customer Demand Fuels Upbeat Sales Forecast
(Bloomberg) -- Adobe Inc. shares jumped after the software maker gave a bullish sales forecast for next year, reassuring investors that its widening suite of creative and business products will continue to attract customers.
Shares climbed 8.2 percent to $257.84 at 12:46 p.m. in New York on Tuesday. The stock has gained 46 percent this year, compared with a 4.3 percent rise in the Standard & Poor’s 500 Index.
Revenue may climb 20 percent in fiscal 2019, with sales increasing evenly across the central business units, the San Jose, California-based company said Monday in a statement. That growth rate would push revenue to about $10.8 billion for the year, topping analysts’ average estimate, based on Adobe’s reported sales and fourth-quarter forecast for 2018.
Chief Executive Officer Shantanu Narayen has sought to expand Adobe by emphasizing its main creative software and bolstering a suite of business offerings. While the company goes toe-to-toe with Salesforce.com Inc. in marketing and e-commerce technology, the digital media products have traditionally grown at a faster clip -- a trend the company expects will end in fiscal 2019.
“Adobe remains one of the best positioned growth stories in software,” Kirk Materne, an analyst at Evercore ISI, wrote on Tuesday in a note. The company is a reprieve from “a volatile market where investors are debating the durability of growth and what to pay for growth assets.”
Cowen & Co. boosted its price target for Adobe’s shares to $300 from $295, while other analysts heaped praise on the software maker.
Adobe is hosting its annual creative conference, MAX, in Los Angeles this week, where it will showcase its latest apps and concepts. The company issued its forecast Monday before a meeting with analysts and investors at the conference.
The maker of Photoshop said sales for its suite of media-editing creative software will increase about 20 percent in fiscal 2019. Revenue from the company’s Experience Cloud, which offers marketing, analytics and e-commerce tools, may also gain about 20 percent, while subscription bookings for the unit are expected to rise 25 percent.
The company said its total addressable market will increase to $108 billion by 2021, from a projected $83 billion in 2020.
“Our strategy of empowering people to create and transforming how businesses compete is leading to larger addressable market opportunities and the potential for accelerated revenue and earnings growth,” Narayen said in a statement.
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