Adobe (ADBE) Estimates Up Modestly on Solid Q2, Stock Still Dog

Goldman is reiterating its Neutral and boosting estimates for Adobe (ADBE) after ADBE’s solid Q2 earnings release yesterday.

ADBE posted $887 million in revenue (vs. $880 million consensus) and EPS of $0.50 (vs. $0.46 consensus). ADBE also guided FQ3 Revenue and EPS higher: Revenue of $855-$885 million vs. $853-$878 million consensus and EPS of $0.45-$0.47 vs. $0.43-$0.45 consensus. Goldman is upbeat about:

…the momentum in the company’s CS3 (Creative Suite 3) suite, (2) relative proximity of CS4 (a quarter away, in our view), (3) the start of the Acrobat 9 release, (4) strong international growth, (5) ongoing buybacks, and (6) lower tax rates going forward.

Goldman continues to urge caution on the stock, however, due to:

moderating operating margin expansion (as the company continues to invest), (2) a difficult macro environment, particularly in advertising, (3) ongoing lack of growth in the Americas, (4) weaker-than-expected deferred revenue, and (5) our entering a seasonally weak period for software stocks.

Goldman’s revised EPS estimates for FY2008, FY2009 and FY2010 move to $1.69, $1.94 and $2.18, respectively, from $1.66, $1.95, and $2.22.

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