Adobe Inc. (NASDAQ:ADBE) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

Shareholders of Adobe Inc. (NASDAQ:ADBE) will be pleased this week, given that the stock price is up 13% to US$525 following its latest quarterly results. The result was positive overall - although revenues of US$5.3b were in line with what the analysts predicted, Adobe surprised by delivering a statutory profit of US$3.49 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Adobe

Taking into account the latest results, the consensus forecast from Adobe's 35 analysts is for revenues of US$21.5b in 2024. This reflects a credible 5.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 5.8% to US$11.99. Before this earnings report, the analysts had been forecasting revenues of US$21.5b and earnings per share (EPS) of US$11.87 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$608, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Adobe, with the most bullish analyst valuing it at US$700 and the most bearish at US$450 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Adobe's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% annually. So it's pretty clear that, while Adobe's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$608, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Adobe analysts - going out to 2026, and you can see them free on our platform here.

We also provide an overview of the Adobe Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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