Adobe shares rise after reports on quarterly profit surpass predictions

US stocks surged nearly 2% in premarket trading Friday, recovering from the big dive on the previous day. Shares in Adobe Inc. surged 5.2% before the start of the trading session. The reason for the interest in the company is its report for a quarterly profit that surpassed analysts’ expectations.

During the pandemic crisis, the demand for Adobe products increased. As workers replaced their office spaces with the rooms in their homes, the use of digital documents increased. Thanks to that, the solutions offered by Adobe gained huge popularity.

The company registered a net income of $1.1 billion, or $2.27 per share, for the second quarter of this year. The results for the same period of the previous fiscal year showed a net profit of $632.6 million, or $1.29 per share.

The reported revenue beat analysts’ predictions of $3.16 billion, or $2.32 per share. The company also surpassed its own expectations that were lowered due to the uncertainty caused by the coronavirus outbreak. Adobe’s forecasts for the second quarter of 2020 were for revenue of $3.18 billion, or $2.35 per share.

The annual recurring revenue for digital media amounted to $9.17 billion, while analysts predicted results around $9.11 billion. The annual recurring revenue for Adobe’s creative segment was $7.93 billion at the end of the second quarter of the year. This was yet another result that surpassed analysts’ predictions for annual recurring revenue of $7.92 billion.

The company’s expectations for the adjusted earnings for the third quarter are for revenue of $3.15 billion, or $2.40 per share. Meanwhile, analysts predict a third-quarter revenue of $3.26 billion, or $2.46 per share.

Analyst stock price forecast and recommendation

According to CNN Money, 24 analysts who offer 12-month price forecasts for Adobe Inc. have a median target of $424.50, with a high estimate of $470.00 and a low estimate of $293.00. The median estimate represents a +9.38% increase from the last price of $388.11.

The same media also provides the recommendations of 28 investment analysts who have a consensus rating of “Buy” for Adobe Inc. Out of all 28 analysts, 17 ranked the company’s stock as “Buy”, 8 as “Hold”, 2 as “Outperform” and 1 – as “Underperform”.