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Can Adobe Maintain Its Momentum?

On the earnings conference call, management said the company expects to reach 1.25 million paid subscribers by the end of this year. That's an aggressive target, considering that the company ended the first quarter with 479,000 subscribers. Adobe has about 2 million users on free trial.

Companies don't set goals they don't feel is really achievable. And so investors can expect roughly 775,000 additional paid subscribers by the end of the year, which amounts to roughly 260,000 per quarter. That is an important number to keep an eye on in Tuesday's earnings report.

Given the recent challenges that other software companies such as Oracle (ORCL - Get Report) and Red Hat (RHT - Get Report) have experienced, investors will be eager to hear what Adobe's management says. What's more, since the first-quarter report, the company's chief technology officer, Kevin Lynch, left to join Apple (AAPL - Get Report).

Other questions will be answered in the second-quarter report, and so investors will learn whether the company can maintain its momentum.

In the meantime, there is no debate about the quality of Adobe's management team and the direction it is taking this company. I still rate the stock a strong buy and expect shares to reach $50 in the second half of the year.

At the time of publication, the author was long AAPL and held no position in the other stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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