Earnings Preview: Adobe Systems

Adobe Systems (ADBE) is expected to report Q3 earnings after market close Tuesday with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 46c for EPS and $876.70M for revenue, according to First Call. On June 16, management provided Q3 guidance of 45c to 47c on revenue of $855M to $885M.

Analyst Views

PacCrest expects Q3 results to meet, or slightly exceed, consensus expectations and for Adobe to issue strong Q4 guidance. This morning, Kaufman Brothers upgraded Adobe to buy from Hold, as it believes Adobe will deliver a solid quarter and maintain guidance. The firm believes the recent market sell-off has overly punished Adobe shares, and Kaufman sees the next catalyst as being the CS4 product launch events scheduled for the next few weeks. Kaufman believes Q4 will likely show results in line with Street expectations, and accordingly this will shift the attention to guidance. The firm expects that management will reiterate that it expects to see approximately 13% revenue growth and 39% non-GAAP operating margins for 2008. If it does reiterate, Kaufman believes that investors will be relieved. Consensus expectations for Q4 are an EPS of 51c on revenue of $939.41M.