Adobe Barely Off 52-Week Lows Ahead of Earnings (ADBE)

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Tuesday after the close, we’ll get to see earnings out of Adobe Systems Inc. (NASDAQ: ADBE). The estimates from First Call are $0.45 EPS on $875.8 million in revenues.  Adobe frequently offers longer-term guidance compared to many software companies. Next quarter estimates are $0.44 EPS on $874.7 million in revenues. Estimates for fiscal Nov-2008 are $1.82 EPS on $3.57 billion in revenues.

Analysts have an average price target north of $45.00, which is approximately an implied 50% move to current prices.  2008 hasn’t been great to Adobe stock as shares were north of $40.00 at the end of 2007.  They were also above $45.00 at the start of November.  Options are not very straightforward, but it appears that options traders are only braced for a move of $0.98 to $1.12 in either direction.  The closest contracts may not even count for 1 million shares traded on a fully leveraged basis.

Adobe Systems’ 52-week trading range is $30.70 to $48.47, so at $31.61 the stock barely sits above its 52-week low.  If Adobe hits its estimates in fiscal NOV-2008, it has a forward P/E of 17.4 based on today’s prices.

Jon C. Ogg
March 18, 2008