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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