Shares of Adobe Systems Inc. ADBE attained a new 52-week high of $96.42 on Dec 17, eventually closing at $94.20. The company returned 26.5% in the past one year and approximately 29.6% year-to-date. Average volume of shares traded over the last three months was roughly 3,453K.
What is Driving Adobe Systems?
One of the largest software companies in the world, Adobe Systems’ massive customer base provides it with a distinct competitive edge. We believe that the company is being driven by continuous innovation in the Creative Cloud and Marketing Cloud businesses.
The price appreciation may be attributed to Adobe’s strong fundamentals, solid adoption of creative cloud and better-than-expected fourth-quarter fiscal 2015 results reported on Dec 10. Since then, the stock has gained 5.9%.
In the fourth quarter, Adobe reported earnings of 47 cents per share, surpassing the Zacks Consensus Estimate of 45 cents. The growth was backed by strong adoption of creative cloud that led to a record sequential Creative Cloud ARR (Annualized Recurring Revenue) growth and strong revenues in the Creative product family.
Adobe’s revenues jumped 9.4% sequentially and 23.2% year over year to $1.31 billion. Revenues were at the higher end of the guidance range and in line with our expectations.
We believe that the company will continue to be driven by innovation in its Creative suite businesses. In addition, the consistent adoption of the Adobe marketing cloud could serve as a potential catalyst, going forward. We expect significant synergies over the long term from the integration of Fotolia. Moreover, the solid adoption of Document Cloud, a new subscription package that enables users to sign documents on the cloud, will boost revenues.
Additionally, Adobe Systems delivered an average positive earnings surprise of nearly 6.39% over the trailing four quarters. The company’s solid market position, compelling product lines (including CS cloud initiative and digital media products), strong revenue growth, continued innovation and strong long-term growth potential position it favorably.
Adobe Systems currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some well-ranked stocks in the same space are Citrix Systems, Inc. CTXS, Datawatch Corporation DWCH and Fleetmatics Group PLC FLTX, all sporting a Zacks Rank #1 (Strong Buy).
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