Sometimes,
you do your work well and even exceed the expectations of your boss and
teammates. But such impressive results might not be enough. Seemingly, it’s
exactly what happened with Adobe and its stocks. Let’s figure out why the
company’s shares drowned after the financial report, and why analysts still
look at this asset positively.
Adobe
published the Q3 2023 report, and it beat estimates. But stocks dropped nearly
4% on Friday.
Of
course, if you have Adobe stocks in your portfolio, it might be unpleasant.
But, actually, most investors envy you. Just look at that — the share price has
increased by 80% in the last 12 months. For comparison, Apple stocks have grown only by 15%.
Why did
this drop happen? Probably because short-term traders expected too much from
Adobe as one of the AI movement enthusiasts. In fact, the report was a little
better than estimates. Q3 earnings per share were $4.09 against forecasted
$3.98 (+2.81%). Also, the company reached a revenue of $4.89 bln against $4.87
bln (+0.49%). As you can see, these figures were not far from forecasts.
Generally,
analysts believe that investors should ignore this decrease. Adobe continues to
demonstrate stably high results again and again. This fact allows us to
consider the firm’s great long-term perspectives, even after 80% growth last
year. Especially in the light of the overall US stocks rally happening recently. And
artificial intelligence is a critical point here.
Adobe
actively implements AI technologies in its products and services. For example,
Adobe Firefly, a generative machine learning model, is already on it. And
probably it’s far from the end because AI creates new capabilities for working
with images and might help to increase the number of Adobe products in the
future, also diversifying them.
Plus,
there are not so many competitors for Adobe in this sphere, and it will soon be
reflected in subscription prices. All these
drivers allow considering stable money flows for Adobe in the following years.
This is
probably why the stocks have the analyst rating Buy, and the consensus forecast
of +12% in the next 12 months. Of course, it doesn’t mean that you should add
these stocks to your portfolio and wait for gains. These forecasts just show
that the asset deserves your attention and requires your own analysis, which
helps estimate if it’s a good or bad trade idea.