Stock Adobe Has Dropped as Its Revenue Forecast Falls Below Wall Street’s Expectations.

Dec 18, 2023

Adobe Inc (ADBE), the renowned graphics software giant, experienced a dip in premarket trading following the announcement of its adjusted fiscal fourth-quarter earnings. Despite posting stronger-than-expected adjusted earnings, the company’s weaker-than-expected revenue outlook caused some concern among investors.

In the quarter that concluded on December 1, Adobe, based in San Jose, California, demonstrated an impressive 28% rise in GAAP net income per share, growing from $2.53 to $3.23 stock Adobe. Revenue also witnessed an uptick of 12%, increasing from $4.53 billion to $5.05 billion.

Adjusted earnings for the quarter stood at $4.27 a share, surpassing the Wall Street consensus of $4.13 a share predicted by Barron’s as well as the company’s own non-GAAP earnings estimate of $4.10 to $4.15 per share. Adobe’s revenue for the fourth quarter slightly exceeded the company’s estimated range of $5.03 billion.

Despite these strong figures, investors appear focused on a minor shortfall in the revenue forecast. Adobe’s revenue prediction for the first quarter ending in February lies between $5.1 billion and $5.15 billion, falling slightly short of the Wall Street consensus of $5.16 billion reported by Barron’s.

The first-quarter adjusted earnings is expected to be between $4.35 and $4.40, above the Wall Street average of $4.26. Adobe expects GAAP profits of $13.45 to $13.85 per share in fiscal 2024, with an adjusted estimate of $17.60 to $18 per share. The modified forecast is somewhat higher than the Wall Street average of $17.99.

Adobe’s revenue forecast for the fiscal year is between $21.3 billion and $21.5 billion, which is somewhat lower than the Wall Street average of $21.7 billion.

During the fourth quarter, the company repurchased 1.8 million shares. In a recent statement, Chairman and CEO Shantanu Narayen affirmed Adobe’s strong positioning for 2024 and beyond.

However, stock Adobe has decreased about 4% in recent trade, with the stock valued at around $600. Despite peaking at a 52-week high of $633.89 on Tuesday, the stock rose 85% in 2023 until Wednesday’s market close.

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