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 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.

Davis suggests that Adobe will continue in acquisitive mode.

He says the Federal Trade Commission might object to the company buying DocuSign (DOCU) - Get 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 Report, HubSpot (HUBS) - Get Report, Medallia (MDLA) - Get Report, SurveyMonkey (SVMK) - Get Report and Yext (YEXT) - Get Report