Creative software developer Adobe (ADBE) is set to release its fourth quarter of Fiscal 2024 financials on December 11. Wall Street analysts expect the company to report earnings of $4.67 per share for Q3, up 9.4% year-over-year. Also, analysts expect revenues to increase 10% from the year-ago figure to $5.54 billion, according to TipRanks’ data.
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In terms of share price, the stock has dropped by over 9% in both the past year and year-to-date, due to concerns about AI competition, a weak outlook, and earnings volatility.
Analysts’ Opinions Ahead of Adobe’s Q4 Earnings
Ahead of Adobe’s Q4 earnings, the majority of analysts have given the stock a Buy rating. One such analyst is Brent Bracelin of Piper Sandler, who reiterated a Buy rating on the stock on December 4. He highlights Adobe as a promising large-cap software stock for 2025.
Bracelin is optimistic about the company’s strong subscription growth and improving cRPO metrics (current Remaining Performance Obligation, which measures future subscription revenues under contract). Also, the analyst expects Adobe’s earnings per share to grow over 13% annually, potentially reaching $30+ by 2028.
Similarly, DA Davidson analyst Gil Luria reiterated a Buy rating on Adobe on December 1. It’s worth noting that Luria is a five-star analyst with a 63% success rate and an average return of 15.90% per rating.
The analyst expressed confidence in Adobe’s ability to enhance its already strong margin profile through scale and contributions from AI. He stated, “Driving these margins is a durable growth engine, benefiting from the company’s market leadership and consistent product innovation.”
Luria also highlighted that Adobe’s current valuation—trading at 26x NTM EPS—is the lowest among its large-cap peers. He attributed this to an “AI bear case overhang,” which he considers unwarranted, pointing to the company’s solid earnings potential.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can gauge options traders’ expectations for the stock post-earnings report. Based on a $525 strike price, with call options priced at $11.95 and put options at $0.31, the expected price movement, based on the at-the-money straddle is 8.72%.
Is Adobe Stock a Buy or Sell?
Turning to Wall Street, Adobe has a Moderate Buy consensus rating based on 23 Buys, five Holds, and two Sells assigned in the last three months. At $621.81, the average ADBE price target implies 15.53% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
