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Adobe Shares Higher After Earnings Report; Canaccord Eyes Potential Acquisition Targets

Analyst Richard Davis rates the graphics-software company a buy and lifts his price target to $350 to $320. He wonders whether Adobe will continue its history of growth via deals.
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Adobe  (ADBE) - Get Adobe Inc. Report shares on Friday were higher after its fiscal fourth-quarter earnings exceeded expectations, a report that prompted a Canaccord analyst to raise his price target on the graphics-software company.

Analyst Richard Davis rated the San Jose company a buy and lifted his price target to $350 from $320.

At last check, Adobe shares were 4.6% higher near $320.

“The fiscal fourth-quarter came in a bit better than expected, and targets for next year were reiterated across the board," the analyst said in a note. “Cash-flow generators that deliver growth at scale, such as Adobe, will deliver attractive risk-adjusted returns in this market environment.”

Adobe has built its franchise on acquisitions but shies away from paying big premiums for companies.

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Davis suggests that Adobe will continue in acquisitive mode.

He says the Federal Trade Commission might object to the company buying DocuSign  (DOCU) - Get DocuSign Inc. Report- the provider of end-to-end agreement- and signature-security systems.

But five possible targets “make sense” for Adobe, Davis says: Zendesk  (ZEN) - Get Zendesk Inc. Report, HubSpot  (HUBS) - Get HubSpot Inc. Report, Medallia  (MDLA) - Get Medallia, Inc. Report, SurveyMonkey  (SVMK) - Get SVMK, Inc. Report and Yext  (YEXT) - Get Yext Inc. Report