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By Brendan Gilmartin

Adobe Systems (NASDAQ:ADBE) is scheduled to report Q4 2012 earnings after the close of trading on Thursday, Dec. 13. The results are typically available between 4:00 p.m. and 4:05 p.m. ET and will follow with a conference call at 5:00 p.m. Adobe shares have been rallying in advance of the earnings release, climbing more than 10% since mid-November, pushing the shares to a 52-week high.

We're watching the following items:

1. Non-GAAP Earnings Per Share. Adobe indicated back in September that it was targeting Q4 2012 non-GAAP EPS in the range of $0.53 to $0.58. The current Street estimate is toward the high end of the guidance range at $0.57 (source: Yahoo Finance). Note that the November quarter is typically a strong period for Adobe and, based on recent price action, the Street may be looking for a number closer to $0.60 in order to sustain the recent momentum.

2. Revenues. Adobe previously said it sees revenues in the range of $1.075 billion to $1.125 billion. The consensus is $1.1 billion. This quarter, revenues are seen benefiting from improved currency tailwinds.

3. Earnings Per Share Guidance (Q1 2013). With the market having priced in a solid Q4, investors will pay close attention to the outlook for the upcoming quarter. The current consensus is $0.56.

4. Revenue Guidance (Q1 2013). The estimate for revenues in the Q1 2013 period is $1.07 billion.

Last quarter, Adobe shares rose more than 4% in response to a solid earnings release, stemming from stronger-than-expected Creative Cloud subscriptions and gains in the Digital Marketing Suite.

Recent News

On Dec. 5, Adobe announced the addition of a new board member, Kelly J. Barlow, a partner with ValueAct Capital. "It's an exciting time for Adobe as the company positions itself for long-term growth and leadership in digital media and digital marketing," Barlow commented in the release accompanying the announcement.

On Nov. 16, JMP Securities reiterated an Underperform rating on Adobe Systems and a $26 price target, according to JagsReport.com.

Technical Review

Adobe Systems recently broke out to a fresh multi-year high ahead of its Q4 2012 earnings release and added more than 10% since mid-November. In the wake of the advance, the Relative Strength Index hurdled above the 70-level -- an area generally consistent with overbought conditions -- while the MACD is also extended. Against this backdrop, the market is pricing in a strong quarter and positive guidance for the balance of the year. Should earnings disappoint, there is downside support to $34.50 (September/November high), followed by the 50-day SMA near $33.50.

Click to enlarge image.

Source: StockCharts.com.

Summary

Adobe Systems shares have been breaking out over the past several weeks, hitting multiyear highs, thanks to evidence of strength in Creative Cloud subscriptions and gains in the Digital Marketing Suite. Many on the sell side also believe the company is ultimately poised to benefit from its recent strategic shift toward a subscription-based revenue model, while currency tailwinds and takeover chatter support the shares. The only caveat to this positive story ahead of earnings would be the recent run-up in the shares to a 52-week high, implying a positive report may be priced in at these levels.

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Source: Adobe Systems Breaking Out Ahead Of Q4 Results On Thursday