Wednesday, August 02, 2006

Color on mid-quarter update: Adobe Systems (ADBE)

- Mostly positive comments on Adobe Systems (NASDAQ:ADBE) after the co released an in-line mid-quarter update. Adobe's intra-quarter update guided FY06 Q3 revenues and EPS to the previously targeted ranges of $580M-$610M and $0.25-$0.27.

RBC Capital notes that with no direction given as to high-end or low-end, they believe this to be "middle of", as last quarter's intra-quarter update clearly stated they would meet low-end of the range.

While this is a positive for the company, they are expecting some of the top-line revenue to be attributed to a currency tail-wind, which they estimate at approximate $7M. Regardless, Street sentiment over the past few weeks had factored in a low-end quarter, which now seems unlikely.

Based on common themes in the software sector this quarter, the firm would expect EPS to be in the mid to high-end of the company's targeted range, benefiting from a lower share count and higher interest income than the company previously guided to. As the product cycle continues to age, investors will be clearly focused on the company's planned launch of Acrobat 8 in Q4 and CS3 in Q2 of next year.

With 5-weeks remaining in the quarter, they believe the focus on the call will surround the regional release cycle for the two upcoming products, the associated expenses, and R&D efforts for cross-platform (MacTel) development.

Reits Outperform and $36 tgt.

Notablecalls: I think ADBE's mid-quarter update was positive and I expect the shares to trade around $30 level today. Any price above $30.50 levels makes it a short. But most likely not a daytrade.

1 comment:

notablecalls said...

Still feelin like a chump bc of ADBE. Hope non of you gut hurt shorting this juggernaut.