Adobe Getting Lift From Economic Reopening Post-Pandemic

Software giant Adobe is benefiting as the economy reopens as the Covid-19 pandemic wanes, a senior executive says. The company's beat-and-raise quarterly report provided proof of that. ADBE stock jumped on Friday.

The maker of digital media and marketing software late Thursday reported fiscal second-quarter earnings that easily topped expectations. Adobe also guided above views for the current quarter.

The San Jose, Calif.-based company earned an adjusted $3.03 a share on sales of $3.84 billion in the quarter ended June 4. On a year-over-year basis, Adobe earnings rose 24% while sales climbed 23%.

For the current quarter, Adobe expects to earn an adjusted $3 a share, up 17%, on sales of $3.88 billion, up 20%.

ADBE Stock Rises After Earnings Report

In morning trading on the stock market today, ADBE stock advanced 2.2%, near 563.35. Earlier in the session, ADBE stock notched a record high 570.

"All three of our businesses — Creative Cloud, Document Cloud and Experience Cloud — just killed it this quarter with excellent performance," Chief Financial Officer John Murphy told Investor's Business Daily. "Content creation and customer experience engagement in personalized ways are resonating across all of our businesses. And it's really driving the momentum and acceleration in the business."

That momentum will continue in the company's seasonally weaker fiscal third quarter, Murphy said. The current quarter includes the summer months of June, July and August.

"The macroeconomic stability is giving a lot of enterprises confidence to invest again," Murphy said. "Companies are prioritizing digital transformation."

The reopening of the economy and return to offices after the pandemic should provide a tailwind for Adobe's business, he said.

Analysts Raise Price Targets On Adobe Stock

At least 15 Wall Street analysts raised their price targets on ADBE stock after the earnings report.

Mizuho Securities analyst Gregg Moskowitz reiterated his buy rating on ADBE stock and upped his price target to 640 from 600.

"Adobe's expansive portfolio of software solutions has made it the gold standard in content creation, consumption, and collaboration," Moskowitz said in a note to clients. "Adobe is very well positioned to benefit from digital transformation with its comprehensive end-to-end offering that differentiates it from competitors."

On June 11, ADBE stock broke out of a 40-week consolidation period at a buy point of 536.98, according to IBD MarketSmith charts.

However, IBD Leaderboard analysis offered investors an earlier buy point of 525.54 from a cup base within the larger consolidation pattern.