Analyst Note| Dan Romanoff, CPA |
Wide-moat Adobe reported strong third-quarter results, including upside to guidance for revenue and non-GAAP EPS, and provided a better than expected quarterly outlook. We continue to see strength in all segments and geographies regarding quarterly results and are pleased to see continued strength in the digital experience, or DX, segment, which we believe is critical for growth longer-term. We think results continue to support our investment case that Adobe will continue to dominate the creative segment, and its well-rounded portfolio, including Magento and Marketo, position the firm as a digital marketing leader. Given results and guidance, we are raising our fair value estimate to $610 per share, from $569. Given the stock’s run year to date, we see shares as fairly valued.