Adobe Systems Incorporated (NASDAQ:ADBE) is scheduled to report earnings on Thursday, and analysts at Deutsche Bank are expecting in-line results.
The creative cloud company is expected to post earnings of $3.98 per share on revenue of $4.87 billion. Investors will be watching for a possible earnings surprise, as well as updates on Adobe’s new line of AI products, known as Firefly.
“Much like last quarter, we expect Adobe's F3Q earnings will mainly focus on generative AI with our conversations and 3rd-party data suggesting in-line results,” analysts wrote. “We expect investors will look for commentary on: (1) timing/path to general availability/monetization; (2) updated usage metrics; (3) Firefly roadmap; and (4) partnerships or other distribution of Firefly (such as through [Google’s] Bard).”
Deutsche Bank has a $550 price target for the stock which traded at $564.35 Monday afternoon. The firm encouraged caution when evaluating Firefly in the long term.
“For all the optimism we hear around Firefly, we think some investors may be somewhat disappointed with Adobe's longer-duration approach to monetization, vs. peers like Microsoft, Salesforce, and ServiceNow which seem to be taking a more significant and immediate approach,” analysts wrote.
“Management commentary intra-quarter suggests Adobe will balance new user growth and customer retention/ engagement with pricing for incremental value of genAI, which may not be as attention grabbing as 50%+ pricing uplifts, but will ultimately drive long-term unit and dollar growth.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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