On Friday, Oppenheimer sustained its Outperform rating on Adobe shares (NASDAQ: NASDAQ:), with a steady price target of $625.00. Adobe’s third fiscal quarter showcased robust results, exceeding estimates and marking the quickest growth in Digital Media Annual Recurring Revenue (ARR) in over three years. Moreover, the company celebrated a fifth consecutive quarter of record operating margins.
The positive outcomes, however, were tempered by a conservative forecast for the upcoming fourth fiscal quarter’s net new Digital Media ARR, which is projected to be approximately half of the five-year average for the same quarter. This cautious outlook is partly attributed to some anticipated fourth-quarter deals that were concluded in the third quarter and the shift of Cyber Monday to the first quarter of fiscal year 2025.
The guidance issued by Adobe indicates that any increase to the original net new ARR forecast for the fiscal year 2024 may be less significant than the previous year. This has sparked concerns over whether the recent uptick in key bookings and the potential for further improvement in the fourth quarter will translate into a substantial revenue acceleration in the next fiscal year.
The report suggests that these developments could have an impact on the company’s stock multiples. Despite the mixed guidance, Oppenheimer’s stance remains positive, as indicated by the maintained Outperform rating.
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