Adobe Systems (ADBE) Stock Closed Higher After Argus Raised Price Target

NEW YORK (TheStreet) -- Shares of Adobe Systems  (ADBE) closed up 3.24% to $82.28 after analysts at Argus today increased their price target to $95 from $85 and maintained their "buy" rating.

The firm cited strong second quarter 2015 results for the price raise.

Last week, Adobe Systems reported revenue of $1.162 billion, or 48 cents per share, compared to revenue of $1.07 billion, or 37 cents per share in the same quarter last year.

The company was expected to report revenue of $1.161 billion, or 45 cents per share, according to analysts polled by Thomson Reuters.

Subscription revenue nearly doubled to $774 million from $477 million, analysts noted.

While the company is undergoing a transition from a perpetual-license business model to a software-as-a-service model, which put pressure on sales of the last couple of years, analysts expect revenue to surge over 2015 and 2016 as the company shapes up its subscription business.

Separately, TheStreet Ratings team rates ADOBE SYSTEMS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ADOBE SYSTEMS INC (ADBE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although ADBE's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average. To add to this, ADBE has a quick ratio of 2.02, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 66.6% when compared to the same quarter one year prior, rising from $88.53 million to $147.49 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • ADOBE SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADOBE SYSTEMS INC reported lower earnings of $0.52 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $0.52).
  • You can view the full analysis from the report here: ADBE Ratings Report

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