Investing

Earnings Previews: Adobe, Lennar

David Tran / iStock Editorial via Getty Images

The pace of earnings reports has slowed to a trickle as the end of the September quarter approaches. No notable earnings reports were released late Tuesday, nor are any scheduled for release on Wednesday.

Here is a look at two companies scheduled to report quarterly results after U.S. markets close on Thursday.

[in-text-ad]

Adobe

Software maker Adobe Inc. (NASDAQ: ADBE) posted a new 52-week high on Tuesday, capping a six-month share price gain of almost 65% and a 12-month gain of nearly 37%.

Since early June, Adobe has received upgrades from five analysts, including BofA and Morgan Stanley. The average price target of the five upgrades was $98 per share. The proposed $20 billion acquisition of cloud-based collaborative design software maker Figma remains in limbo, awaiting approval from EU, U.K. and U.S. regulators.

Of 38 analysts covering the stock, 25 have a Buy or Strong Buy rating, and the other 13 have Hold ratings. At a recent price of around $542.00 a share, the implied upside based on a median price target of $572.00 is 5.5%. At the high target of $660.00, the upside potential is 21.8%.

Fiscal third-quarter revenue is forecast at $4.87 billion, which would be up 1.1% sequentially and by 9.9% year over year. Adjusted earnings per share (EPS) are forecast at $3.98, up 1.8% sequentially and 17.1% higher year over year. For the full 2023 fiscal year ending in November, analysts are forecasting EPS of $15.73, up 14.7%, on sales of $19.33 billion, up 9.8%.

Adobe stock trades at 34.5 times expected 2023 EPS, 30.5 times estimated 2024 earnings of $17.76, and 26.3 times estimated 2025 earnings of $20.58 per share. Its 52-week trading range is $274.73 to $570.24. Adobe does not pay a dividend. Total shareholder return for the past year was 36.80%.

Lennar

Homebuilder Lennar Corp. (NYSE: LEN) has seen its share price rise by nearly 45% over the past 12 months.

In a somewhat counterintuitive market, rising interest rates have been encouraging sales of new homes. Homeowners with existing mortgages with low interest rates have been reluctant to sell and take on a much higher interest rate. Buyers have decided that buying a new house is better than waiting for the market to open up again, and homebuilders like Lennar, KB Home (up nearly 66% year over year) and D.R. Horton (up almost 55%) are all doing well.

Last month, Berkshire Hathaway revealed new positions in Lennar and two other homebuilders with an investment of $800 million.

Of 23 analysts covering the stock, 14 have a Buy or Strong Buy rating, and seven more rate it at Hold. At a share price of around $115.00, the upside potential based on a median price target of $138.00 is 20%. At a high target of $161.00, the upside potential is 40%.

For its first quarter of fiscal 2023, Lennar is expected to report revenue of $8.52 billion, up 5.9% sequentially but 4.6% lower year over year. Adjusted EPS are pegged at $3.53, up 20.1% sequentially and down 31.9% year over year. For the full fiscal year ending in November, EPS are forecast at $12.77, down 28.7%, on sales of $32.51 billion, down 3.5%.

Lennar stock trades at 9.0 times expected 2023 EPS, 8.4 times estimated 2024 earnings of $13.67 and 7.6 times estimated 2025 earnings of $15.04 per share. The 52-week trading range is $69.90 to $133.24. Lennar pays an annual dividend of $1.50 (yield of 1.25%). Total shareholder return for the past year is 46.72%.

Escape Credit Card Debt Quicksand With a 0% Card Today (sponsor)

Looking for a smarter way to tackle your credit card debt? A balance transfer card could be your ticket to financial freedom, finally eliminating your debt once and for all. We’ve assembled a list of the top balance transfer cards available today. Many offer a 0% introductory APR, giving YOU the chance to pay down your balance without the added cost of interest. Even better, many come with no annual fee—so you can focus on eliminating debt and keeping more money in your pocket. Click here to get started today.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.