Adobe Systems Incorporated (NASDAQ: ADBE) stock rose over 3% on March 16th, 2018 (As of 1:33PM EDT; Source: Google finance) leading to over 28.6% in this year to date. Analysts from BMO Capital Markets enhanced their target from $205 to $260, as further margins and FCF upside would drive share prices. BMO Capital sees Even Stifel upgraded their stock outlook $230 to $250 as they see an ongoing outperformance trend. Adobe Summit could be the next catalyst and the brokerage firm expects new products sparking value with new and existing customers.
The group sees a positive FY2018 start given their ongoing execution against their strategy. For the first quarter of 2018, they delivered a record revenue of $2.08 billion dollars, which represents 24% yoy growth. The GAAP earnings per share in Q1 was $1.17, and non-GAAP earnings per share were $1.55. Their Digital Media business delivered a solid growth in both Creative revenue as well as Document Cloud revenue for the first quarter, achieving a net new annualized recurring revenue, or ARR growth of $336 million. The group’s Creative ARR was $5.07 billion, marking the first time Creative ARR crossing $5 billion. They continue to acquire new subscribers through Creative Cloud single app and all app offerings.
Moreover, the strength in their major geographies, emerging markets like Korea, China, and Southeast Asia are starting to contribute to subscriber growth. Creative Cloud remains the gold standard for creativity and design. The group is also attracting a broader set of consumers and creative professionals through innovative new applications like Adobe Character Animator, Spark, Lightroom CC, Dimension and XD. Adobe XD is an innovative new app for designing experiences across multiple screens
Apart from their core services, the group is focusing on delivering new services including Adobe Scan and Adobe Sign. Adobe Scan, their mobile PDF application that leverages Adobe Sensei to capture and create intelligent PDFs, which has been downloaded for more than 7 million times. Adobe Sign is currently the preferred e-signature solution in Office 365, and closed their first set of joint customers in the quarter.