Adobe Stock Price Hit as EPS Guidance Misses Mark – Analysts Drop Targets

Adobe’s stock (ADBE) is a big loser through the pre-market session, down 11.81% at $485 despite beating on both revenue and EPS. What is behind the sentiment shift?

The company’s financial results for the fourth quarter of the FY 24 highlighted significant year-over-year growth in key financial metrics, but the outlook from here is not what markets wanted. The company reported an adjusted earnings per share (EPS) of $4.81, marking a 12.6% increase compared to the same quarter in the previous fiscal year, and up on the $4.67 expected.

Revenue of $5.61 billion was also a beat on the $5.54 billion consensus from markets; whilst Adobe’s adjusted operating profit for this quarter reached $2.60 billion, reflecting a 10.8% increase.

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Considering the stock was down 5.20% on year-to-date basis leading in to the release, further underperformance was likely to be harshly treated. The guidance for next year of $20.2 – $20.5 in EPS was below the consensus mark of $20.53 which coming in light of peers’ boosts via AI has seen sentiment shift.

Key financial highlights from Adobe’s Q4 2023-24 earnings report include:

Adjusted EPS: $4.81, up 12.6% year-over-year.

Adjusted Operating Profit: $2.60 billion, up 10.8% year-over-year.

Off the back of numbers, 13 analysts came in with downward price target revisions on Adobe, with the current consensus a shade below $600 continuing to reflect a significant potential upside according to the street.

Adobe’s continuous investment in emerging technologies positions it well for further value generation and competitiveness in the digital domain. Stakeholders will be keeping an eye on the company’s next moves, especially in the areas of AI and cloud-based solutions, which are key drivers of future growth for the industry.