Adobe Rock-Solid Ahead of Tuesday’s Confessional
Nasdaq-100 component Adobe Inc. (ADBE) reports Q3 2021 earnings after Tuesday’s closing bell, with analysts looking for a profit of $3.02 per-share on $3.9 billion in revenue. If met, earnings-per-share (EPS) will mark an 18% profit increase compared to the same quarter last year. The stock rose nearly 3% after beating Q2 estimates and raising Q3 guidance in June and has added another 16% since that time.
Leader in Digital Transformation
The Silicon Valley blue chip has been an outstanding performer in the last decade, rising more than twenty-fold, and is currently trading near an all-time high. The company is perfectly positioned to benefit from broad-based digital transformation, with a product catalog described by Mizuho analyst Gregg Moskowitz as a “highly comprehensive end-to-end offering that differentiates it from competitors and should enable it to drive more holistic sales across its clouds”.
Moskowitz raised the firm’s target to $695 and reiterated a ‘Buy’ rating on Friday, noting that, “Adobe is slated to report its F3Q (August) earnings results after the close on September 21. Our ADBE checks were once again favorable, and we expect the company to report healthy upside to our & Street estimates. In our view, ADBE’s expansive portfolio of software solutions has made it the gold standard in content creation, consumption, and collaboration”.
Wall Street and Technical Outlook
Wall Street consensus remains pristine despite Adobe’s 30%+ year-to-date return, with a ‘Buy’ rating fueled by 20 ‘Buy’, 2 ‘Overweight’, 4 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions at this time. Price targets currently range from a low of $550 to a Street-high $750 while the stock closed Friday’s session on top of the median $658 target. This placement suggests that stronger-than expected metrics will be needed to generate higher prices.
Adobe completed a breakout above 2018 resistance in November 2019 and tested new support successfully during 2020’s pandemic decline. The subsequent uptick mounted the February peak at 378 in June, generating a strong uptrend that stalled at 537 in September. The stock mounted that resistance level in June 2021, and has added points at a rapid pace since that time. Even so, long-term price projections show a cluster of hidden resistance just above 700, lowering reward and raising risk potential for new long positions.
For a look at all of today’s economic events, check out our economic calendar.
Disclosure: the author held no positions in aforementioned securities at the time of publication.