Adobe Shares Collapse After Weak Guidance

Shares of Adobe had their second worst day in the past decade this week after the company reported weak guidance.

The company’s guidance for its fiscal first quarter badly missed analysts’ estimates with the stop dropping 10% on Thursday as Wall Street digested the news.

The worst day for the company’s shares had been a 15% slide in mid-March of last year, when coronavirus panic set in the markets.

Adobe said that revenue in its fiscal first quarter, which goes through Feb. 2022, will be $4.23 billion. This is behind analysts’ predictions for revenue of $4.34 billion, according to Refinitiv.

For the full year, Adobe expects sales of $17.9 billion, which is also below analysts’ average estimate for revenue of $18.16 billion.

“We believe the shares will be weak today as concerns about a slowing spending environment and conservative guidance proved to be correct,” remarked analysts from Atlantic Equities.
The firm currently has a “buy” rating on the stock and said the outlook likely reflects a “muted spending environment observed across the sector.”

For the fourth quarter, Adobe’s revenue had grown 20% to $4.11 billion, beating estimates.

“Adobe’s financial performance in fiscal 2021 was outstanding, with top-line acceleration resulting in more than $7 billion in operating cash flows,” said Dan Durn, executive vice president and CFO, Adobe. “With an estimated $205 billion addressable market, we are well positioned for significant growth in the years ahead with our industry-leading products and platforms.”

It was also this week that JPMorgan lowered its rating on Adobe from “buy” to “neutral”, as part of a wave of downgrades on software companies issued by the firm.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.