Adobe delivered stronger-than-expected 3Q results, thanks to the robust demand for cloud-based creative software amid the coronavirus pandemic. The software maker’s 3Q adjusted earnings jumped 25% to $2.57 per share year-on-year, and topped analysts’ estimates of $2.41. Its revenues rose 14% to $3.23 billion and also came above the Street consensus of $3.16 billion. Shares rose 1.9% after-hours on Tuesday.
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Adobe (ADBE) said sales of the company’s flagship creative segment increased 19% to $1.96 billion, while revenues at its document cloud division grew 22% to $375 million, benefiting from the increase in remote work trends during the pandemic. Adobe’s digital media segment sales advanced 19% to $2.34 billion.
The company projects 4Q sales of $3.35 billion and adjusted earnings of $2.64 per share. Adobe also expects its digital media segment revenue to increase by 18% in the fourth quarter ending in November. (See ADBE stock analysis on TipRanks).
Just ahead of Adobe’s 3Q numbers, BMO Capital analyst Keith Bachman raised the stock’s price target to $535 (7.5% upside potential) from $440 and maintained a Buy rating, citing “upside” in 3Q results and November-quarter guidance. He remains bullish on the opportunities for the company’s document cloud business.
Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 8 Buys and 1 Hold. The average price target of $525.56 implies upside potential of about 5.6% to current levels. Shares gained about 51% year-to-date.
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