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Adobe Analyst Day: Analysts Discuss New Financial Targets, Figma Deal

Stock Markets Oct 19, 2022 06:58
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By Senad Karaahmetovic

Shares of Adobe Systems (NASDAQ:ADBE) are up over 3% in pre-open Wednesday as investors are reacting positively to new financial targets presented at yesterday’s Analyst Day.

For 2023, Adobe said it sees revenue between $19.1 billion and $19.3 billion while the adjusted EPS is seen between $15.15 and $15.45. Adobe also said it sees Digital Media net new annualized recurring revenue of about $1.65 billion.

"Changes to foreign exchange rates are expected to result in an approximately four percent headwind to total revenue year-over-year growth rates in fiscal year 2023. Changes to foreign exchange rates are expected to result in an approximately $700 million downward revaluation to Adobe’s total Digital Media annualized recurring revenue balance for FY 2023," Adobe stated.

Elsewhere, Adobe presented a series of new initiatives and platform enhancements, while management also reflected positively on the pending Figma acquisition.

Here's what some Wall Street analysts have to say about Adobe after attending yesterday's event.

Mizuho analysts: "Net new Digital Media ARR, and EPS guidance [were] well below our estimates - and even more meaningfully below consensus - although we believe many investors will view the guide as being de-risked. In our view, ADBE does remain well-positioned to benefit from digital transformation with its comprehensive end-to-end offering, although we continue to believe the shares will likely be range-bound over the near- to medium-term."

BMO analysts: "We come away from Adobe’s Analyst event a bit more encouraged, though not enough to change our views at this juncture. Our encouragement is driven by a better than expected Digital Experience Guide, not as bad as expected margin/EPS guide, and greater confidence in Figma. While the Digital Media net new ARR guide was below our $1.7 billion target, our initial take is management is being appropriately judicious in the outlook."

Stifel analysts: "Assuming the environment doesn't get dramatically worse, we believe guidance will position Adobe for outperformance and ultimately prove conservative. With numbers now reset for the macro/FX, the lofty price tag of Figma priced into shares, and a high growth asset coming into the numbers in FY23, we like the setup."

UBS analysts: "Adobe hosted what we conclude was a positive Investor Day, marked by solid but seemingly de-risked FY23 revs guidance, in-line FY23 EPS guide of ~$15.30, continued margin improvement and a defense of the standalone Creative segment growth profile. In our view the disclosures undermine the bear case that Adobe overpaid for Figma because it has a structural growth problem to solve."

Morgan Stanley analysts: "Reiterated FY22 targets & FY23 guidance in line with expectations is a modest positive given weak investor sentiment. However, we continue to look for clarity on investor debates around the rationale of Figma, durability of Creative Cloud growth & margin trajectory to get more constructive."

BofA analysts: "We are encouraged by reiterated Q4 outlook for net new digital media ARR of $550mn, suggesting little incremental macro pressure since the Q3 earnings call… We appreciate that Figma is likely to enable Adobe to address a wider base of communicators (900mn) and consumers (4bn) with a more collaborative design use case, though uncertainty as to timing of the deal closure (sometime in 2023) is likely to remain an overhang."

Adobe Analyst Day: Analysts Discuss New Financial Targets, Figma Deal
 

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