Adobe Sets Thursday Earnings Test for Adbe Stock

Adbe stock heads into Thursday after market close with a 3.2% slide over the last month, even as Adobe prepares to report earnings. The setup leaves investors weighing whether the company can extend a run of beats after a quarter that topped revenue, billings and next-quarter EPS expectations.

Adobe's $6.40 billion quarter

$6.40 billion in revenue last quarter gave Adobe a 12% year-on-year increase and a clean beat on analysts’ revenue expectations. The same quarter also delivered an impressive beat on billings estimates, while next-quarter EPS guidance came in ahead of Wall Street’s view. For traders, that combination matters because it shows the company did not rely on one metric to clear the bar.

12% growth in the prior quarter also gives a useful benchmark for Thursday’s report. Analysts now expect revenue to rise 9.8% year on year this quarter, a step down from the 10.6% growth Adobe posted in the same quarter last year. If that forecast holds, the company would still be expanding, just at a slower pace than the recent comparable period.

Analysts Hold Estimates

30 days of estimate revisions have not produced much movement: the majority of analysts covering Adobe have reconfirmed their numbers. That leaves the market leaning on the same expectations heading into the print, with fewer late changes than often appear before a high-profile report. Adobe is also the first among its peers to report earnings this season, so its numbers will set the tone for vertical software stocks.

3.4% is the average gain for vertical software stocks over the last month, versus Adobe’s 3.2% decline. That gap leaves the shares lagging the group even before the earnings release, despite Adobe’s history of exceeding Wall Street’s expectations. For a stock that has already slipped while peers advanced, Thursday’s report is the near-term test that can either close that gap or widen it further.

Thursday after market close is the point when the comparison becomes real. If Adobe again beats revenue and billings expectations, the stock can lean on a familiar pattern; if growth lands closer to the 9.8% forecast without another upside surprise, the recent underperformance becomes harder to dismiss.