San Jose-based software company Adobe Systems (NASDAQ: ADBE [FREE Stock Trend Analysis]) is due to report its quarterly earnings results on Thursday after the closing bell. Heading into the report, investor expectations are high as the stock has been moving nearly straight up since mid-November, notching a one-month gain of 10 percent. During Wednesday's trading session, ADBE added a little over 1 percent, outpacing the broader market.
Wall Street analysts have consensus earnings per share estimates for Adobe of $0.57, which implies a year over year earnings decline of 15 percent versus the $0.67 the company reported last year. The high estimate on the Street is $0.61 with a low estimate of $0.55.
Revenue is expected to be $1.10 billion, or a 4.30 percent decline versus the year ago period. The high revenue estimate is $1.12 billion with a low estimate of $1.08 billion. In last year's corresponding quarter, Adobe reported sales of $1.15 billion.
Over the last 90 days, EPS estimates for Adobe have come down from $0.67 to the current consensus estimate of $0.57. Estimates have also fallen for the next quarter, from $0.63 to $0.56. Despite the lower estimates from analysts, shares have added around 11 percent over the last 3 months versus a loss of a little less than 1 percent for the S&P 500.
Year-to-date, ADBE has also outperformed the market by a wide margin, notching a gain of more than 27 percent. Heading into Thursday's report, shares are trading near new 52-week highs just under $36.00.
Given the rally in the stock, investors will likely be looking for upside to Wall Street estimates when Adobe reports after the closing bell. Over the last month, the stock has broken out of a trading range and could see more gains if the company's numbers are solid.
Alternatively, however, ADBE could be susceptible to a sell-off if its results aren't ahead of current expectations. With the stock rallying strongly ahead of the quarterly report and analysts bringing down their earnings expectations, Wall Street will likely be looking for Adobe to beat cleanly on the top and bottom lines and offer upbeat commentary and guidance. If the company fails to deliver, the stock could see a sharp pullback.
From a technical standpoint, ADBE is entering Thursday with considerable momentum and strength. The stock is trading above its 20-day, 50-day and 200-day moving averages and has a very high relative strength (RSI) reading of 74.26. Adobe will be a name to watch in Thursday's after-hours trading session and at the open on Friday. The stock should be very active once its quarterly numbers hit the wire.
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