Adobe Systems (NASDAQ:ADBE) reported positive second quarter earnings after the close on Thursday, topping analyst consensus expectations.
The software firm reported Q2 EPS of $3.91, $0.12 better than the analyst estimate of $3.79, while revenue for the quarter came in at $4.82 billion versus the consensus estimate of $4.77 billion.
Here's how Wall Street analysts reacted to the report:
Wells Fargo analysts raised the firm's price target on the stock to $600 from $525, maintaining an Overweight rating.
"ADBE's Q2 results are likely to keep the recent momentum going, as the company delivered solid Q2 upside, an uncharacteristic raise to FY targets, and some new details around expected AI monetization," wrote the analysts.
Evercore ISI analysts stated that Adobe is "back to beat and raise mode," adding that the AI opportunity "remains the biggest question for investors."
"It was a solid quarter and the net new digital media ARR beat underpins the durability of the Digital Media business," said the analysts, who maintained an Outperform rating and $475 price target on the stock. "If we were to pick at anything, we would actually point to the Digital Experience subscription revenue coming in just in-line, with the F3Q guide coming in a touch below our expectations (and implying decelerating sequential growth on an easier comp)."
Meanwhile, Citi's Adobe price target moved to $544 from $462, with its Neutral rating on the stock remaining intact.
Citi analysts stated: "Amidst a surge in positive GenAI sentiment, Adobe posted a larger beat on key DM NNARR metric (11% vs. 9% in Q1; 4-qtr avg of 6.2%), though mostly led by Document Cloud vs. Creative. Digital Experience performance was softer with in-line revenue and incremental macro issues, which drove a $100M cut to annual DX revenue guidance."
"That said, we worry about leading indicators deteriorating as price tailwinds increasingly fade in the coming Qs and magnitude of GenAI monetization unlikely to be significant near term, with questions around conversion."
Deutsche Bank raised its price target on Buy-rated Adobe to $550 from $500 per share.
Adobe reported solid F2Q results, but the star of the show, as expected, was generative AI," declared Deutsche analysts. "In our ~15 years covering the stock, we haven't seen nearly this pace of innovation on display in what is a seminal moment for Adobe's Creative business."
They concluded that they continue to see ADBE as a "compelling opportunity."