With the stock up 29% year to date through Tuesday, investors saw an opportunity to take some money off the table.
For the fiscal 2021 third quarter ended Sept. 3, profit rose to $1.21 billion, or $2.52 a share, from $955 million, or $1.97 a share, a year earlier. Adjusted earnings registered $3.11 a share, up from $2.57. Analysts surveyed by FactSet had forecast $3.01 for the latest quarter.
Adobe posted revenue of $3.94 billion, up 22% from $3.23 billion in the year-earlier quarter. The FactSet analyst consensus called for $3.89 billion.
The stock recently traded at $624, down 3.4%.
The San Jose, Calif., company predicts fourth-quarter adjusted earnings of $3.18 a share on revenue of $4.07 billion. Analysts in the FactSet survey estimate $3.08 a share on revenue of $4.04 billion.
Morningstar analyst Dan Romanoff puts fair value at $610 for the stock.
“Wide-moat Adobe reported strong third-quarter results, including upside to guidance for revenue and non-GAAP earnings per share,” he wrote Tuesday.
“We continue to see strength in all segments and geographies … and are pleased to see continued strength in the digital experience segment, which we believe is critical for growth longer-term.
“We think [the] results continue to support our investment case that Adobe will continue to dominate the creative segment. And its well-rounded portfolio, including Magento and Marketo, position the firm as a digital marketing leader.”
But “given the stock’s run year to date, we see [the] shares as fairly valued,” Romanoff said.