Shares of

Adobe Systems

(ADBE) - Get Adobe Inc. Report

bounced upward Friday, a day after the network publishing software maker reported third-quarter results that beat reduced Wall Street estimates.

Shares of Adobe rose $2.10, or 11.4%, to $20.55 in heavy trading.

U.S. Bancorp Piper Jaffray analyst Gene Munster upgraded his rating on Adobe to outperform from market perform, citing anticipation for the company's upcoming Acrobat 6.0, which he expects to launch in February or March.

Although that's still five to six months away, Munster wrote in a note that he believes early fall represents the best opportunity to capitalize on excitement over the cycle. Historically, Munster said Adobe shares have increased 28% in the five months prior to ship date.

Munster also raised his fourth-quarter estimates in response to new guidance from the company Thursday that included high-end targets that exceeded Wall Street estimates. Muster raised his fourth-quarter earnings estimate to 23 cents a share on sales of $285 million from 22 cents a share on sales of $275 million. (His firm hasn't done any banking with Adobe.)

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Adobe said it expects fourth-quarter revenue to range from $285 million to $300 million and pro forma earnings to range from 21 cents a share to 25 cents a share. The consensus estimate on Wall Street falls at the low end of that range, with fourth-quarter revenue expected to come in at $285.2 million and fourth-quarter earnings at 22 cents a share.

Adobe had set preliminary fourth-quarter targets June 13 in the range of $315 million to $345 million for revenue and in the range of 26 cents to 29 cents a share for pro forma earnings.

The new lower targets still represent an increase from a year earlier. The guidance assumes no change in economic conditions but factors in a seasonal pickup in Europe seen in past years and better sales in Adobe's ePaper segment, CFO Murray Demo said Thursday.

Adobe reported net income of $47.2 million, as calculated by generally accepted accounting principles, or 19 cents a share, in the third quarter, which ended Aug. 31. That compares to net income of $40.3 million, or 16 cents a share, in the same period a year earlier, which included a $39.4 million investment loss charge. Last quarter, Adobe recorded net income of $54.3 million, or 22 cents a share.

Excluding charges, Adobe said it earned pro forma net income of $52.5 million, or 22 cents a share, in the third quarter, compared to $69.1 million, or 28 cents a share, a year earlier and $67.4 million, or 27 cents a share, in the second quarter. The company said revenue declined 2.5%, to $284.9 million from $292.1 million a year earlier and dropped 10.2% from $317.4 million in the second quarter.

Wall Street analysts expected Adobe to earn pro forma net income of 19 cents a share on $276 million in revenue in the third quarter, according to Thomson Financial/First Call.

In its intraquarter update July 31, it lowered its revenue target range to between $270 million and $290 million from its previous range of $300 million to $320 million. Adobe also lowered third-quarter pro forma earnings to 18 cents a share to 23 cents a share, down from the original target of 24 cents to 27 cents. At that time, the company, which makes Acrobat and PhotoShop products, blamed lower-than-expected revenue in July across all of its business segments and geographic markets, with particular weakness in Europe and Japan.

On a postclose conference call Thursday, Adobe executives said business in the U.S., particularly in the education market, rebounded in August, while Europe picked up in the second half of August and weak demand in Asia persisted.

"I am pleased that Adobe is reporting revenue and earnings at the high end of our revised third-quarter targets," said Bruce R. Chizen, president and chief executive officer of Adobe. "I am also encouraged that despite a challenging economic environment, we are planning for growth in Q4."