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Earnings Previews: Adobe, UiPath

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In the first half-hour of Tuesday’s trading, the Dow Jones industrials were up 1.07%, the S&P 500 up 1.55% and the Nasdaq up 1.88%. February’s consumer price index came in as expected, up 6% in 12 months, and core inflation was up 5.5% year over year.

After U.S. markets closed on Monday, GitLab reported fourth-quarter revenue that beat expectations and a net loss per share that was also better than expected. What was dragging the shares down Tuesday was lukewarm revenue guidance for both the current year and the full 2024 fiscal year. Shares traded down 26% in Tuesday’s premarket.

Lennar, SentinelOne and StoneCo are on deck to report quarterly results after markets close on Tuesday.

After Wednesday’s closing bell, the following two tech firms are scheduled to report earnings.

Adobe

Software maker Adobe Inc. (NASDAQ: ADBE) posted its 52-week high 11 months ago, and the shares have dropped by 31.5% since, including a year-to-date dip of 3.6%. Last September, Adobe announced that it would acquire cloud-based software tools maker Figma for $20 billion, a valuation of the privately held firm that many analysts thought was too rich. On top of that, regulators balked at the deal, citing anti-competitive concerns. The deal appears in a more favorable light now than it did in September, and some analysts think closing the Figma deal is critical to Adobe.

Of 37 analysts covering the stock, 19 have a Buy or Strong Buy rating and the other 18 rate it at Hold. At a recent share price of around $324.00, the upside potential based on a median price target of $389.50 is 20.2%. At the high target of $557.70, the upside potential is 72.1%.

Fiscal first-quarter revenue is forecast at $4.62 billion, which would be up 2.2% sequentially and by 8.5% year over year. Adjusted earnings per share (EPS) are forecast at $3.68, up 2.2% sequentially and 9.2% higher year over year. For the full 2023 fiscal year ending in November, analysts anticipate EPS of $15.28, up 11.5%, on sales of $19.27 billion, up 9.4%.

Adobe stock trades at 21.2 times expected 2023 EPS, 18.6 times estimated 2024 earnings of $17.47 and 16.4 times estimated 2024 earnings of $19.76 per share. The stock’s 52-week trading range is $274.73 to $473.49. Adobe does not pay a dividend. Total shareholder return for the past year was negative 22.12%.

UiPath

UiPath Inc. (NYSE: PATH) makes and sells a robotic automation platform. Over the past 12 months, shares have tumbled by about 45%. The company came public in April of 2021 at $56.00 a share, and a short-lived burst of enthusiasm of about a month gave way to a steep decline that did not end until last November. The timing of UiPath’s IPO was poor because it coincided with a pull-back in spending by enterprises that are the company’s sales target. UiPath cut around 250 jobs last year. Cathie Wood’s Ark Invest is the company’s largest shareholder with about 44 million shares.

Of 21 analysts covering the stock, eight have a Buy or Strong Buy rating, with 13 more rating it at Hold. At a recent price of around $14.30 a share, the upside potential based on a median price target of $16.00 is 11.9%. At the high price target of $27.50, the upside potential stretches to 92.3%.

UiPath is expected to report fourth-quarter revenue of $278.69 million, up 6.1% sequentially but down 3.8% year over year. Analysts are forecasting EPS of $0.07, up 30% both sequentially and year over year. For the full 2023 fiscal year that ended in January, estimates call for EPS of $0.06, down from year-ago EPS of $0.08, and sales of $1.03 billion, up 15.3%.

The company’s stock trades at 225.3 times expected 2023 earnings, 107.6 times estimated 2024 earnings of $0.13 and 64.6 times estimated 2025 earnings of $0.22 per share The stock’s 52-week range is $10.40 to $31.88. UiPath does not pay a dividend, and the total shareholder return for the past year is negative 45.44%.

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