Two relatively upbeat notes this morning on Adobe Systems (NASDAQ:ADBE)
Brent Thill, an analyst at Citigroup, raised his price target on the company this morning to $47 from $40. He also slightly increased his earnings forecats: he now sees profits for the November 2007 fiscal year to $1.46 a share from $1.44, for fiscal 2008 to $1.46 from $1.44. Thill cited “increased conviction” about near-term strength for the May 2007 rollout of the new version of its Creative Suite software package, and a more positive long-term outlook due to synergies between the companies older products with the recently acquired Macromedia products. Thill increased his expected fiscal 2007 revenue growth to 16.5% from 14.0%; he boosted 10-year growth rate forecast to 14.0% from 11.4%. He continues to rate the stock a “Buy.”
Meanwhile, Morgan Stanley’s Peter Kuper started coverage of the company with an Equal Weight rating and a $44 price target. Kuper has some near-term concerns - primarily the risk that Creative Suite sales will be weak until the arrival of the new version in May - be seems to be pretty bullish for the long haul. “We see near-term revenue volatility clouding investor views of the company’s long-term potential, however, Adobe has a track record of establishing ubiquitous platforms like PostScript and PDF, and we believe it will be able to leverage this core to dominate another – Flash,” he wrote this morning. “As content takes on greater importance and more relevance over multiple media outlets, we expect the ability to readily leverage yet control this data to become increasingly valuable. Assuming successful execution, ADBE’s stock should reflect the benefits of meeting this demand, even if it is challenged at the moment by concerns over Creative Suite (54% of total revenues) and Acrobat (est. 20% of total revenue). We see any pullback as an entry point for this compelling company.”
Adobe this morning is up 18 cents at $38.72.