Stock to watch today: Adobe Systems Incorporated (NASDAQ: ADBE)

Adobe Systems Incorporated (NASDAQ: ADBE) has reported a revenues growth of 23% to $1.61 billion in the fourth quarter of FY 16 as compared to the corresponding period last year, beating the analysts’ expectation of $1.59 billion. The diluted earnings per share on non-GAAP basis grew to $0.90, which was $0.04 better than the $0.86 that analysts had expected. Adobe Systems has posted the 44% growth in the operating income and the net income has grown 45% for fourth quarter of FY16 on a non-GAAP basis. ADBE has uniquely positioned itself as a cloud provider to post both top line and bottom line growth. Adobe Marketing Cloud has reported a 32% growth in the revenue to record $465 million in fourth quarter of FY 16 as compared to Q4 FY 15. Moreover, ADBE bought back over 3.2 million shares during the fourth quarter FY 16 while returned $331 million of cash to stockholders.

Additionally, as per the company, Adobe Systems met and met or exceeded all of the key financial targets for the 2016 fiscal year. ADBE has reported a 22% growth in the revenue to $5.85 billion in FY 16 against FY 15. In addition, ADBE has posted the diluted earnings per share of $3.01 in FY 16. ADBE in FY 16 has overall repurchased 10.4 million shares and returned $1.01 billion of cash to stockholders.

Meanwhile, ADBE is expecting Q1 FY 17 the diluted earnings per share of of $0.87, which is ahead of the analyst’s estimate of $0.85. The revenues for Q1 FY 17 are expected to be $1.625 billion, which is short of analysts’ projection of $1.65 billion. Moreover, ADBE expects to achieve approximately $225 million of net new Digital Media ARR, 19% revenue growth expected from Digital Media segment and revenue growth of 20% from the Adobe Marketing Cloud.

For the FY17, ADBE expects the earnings per share of $3.75, which is also short of the $3.84 that analysts were expecting. The FY17 revenues are expected to be $6.95 billion, which also misses the analysts’ expectation of $7.08 billion. ADBE expects the revenue and earnings per share to grow sequentially each quarter, with the largest sequential growth in Q4 FY 17.

ADBE stock has risen over 12% in this year to date (as of December 15th, 2016; Source: Google Finance). According to, 18 analysts has covered the stock while recommend a “Moderate Buy”. ADBE has an average price target of $119.23, which is a further upside of 13.44%.

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