It’s been a good week for Adobe Inc. (NASDAQ:ADBE) shareholders, because the company has just released its latest yearly results, and the shares gained 3.8% to US$318. It was a credible result overall, with revenues of US$11b and earnings per share of US$6.00 both in line with analyst estimates, showing that Adobe is executing in line with expectations. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we’ve gathered the latest forecasts to see what analysts are expecting for next year.
See our latest analysis for Adobe
After the latest results, the 27 analysts covering Adobe are now predicting revenues of US$13.2b in 2020. If met, this would reflect a solid 18% improvement in sales compared to the last 12 months. Earnings per share are expected to jump 24% to US$7.50. Before this earnings report, analysts had been forecasting revenues of US$13.1b and earnings per share (EPS) of US$7.38 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The consensus price target rose 6.8% to US$340 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Adobe’s earnings by assigning a price premium. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Adobe at US$410 per share, while the most bearish prices it at US$312. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to analysts, with revenue forecast to grow 18%, in line with its 20% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So although Adobe is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider market. The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Adobe going out to 2024, and you cansee them free on our platform here..
You can also see ouranalysis of Adobe’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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