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Author: Alan LittleDate: 2020-09-17

Adobe (ADBE) shares down 2% despite solid Q3 report

Adobe (ADBE) shares eased 2% lower in trading on Wednesday even though the computer software company posted revenue and earnings that exceeded Wall Street expectations.

Late on Tuesday, Adobe said that its revenue for the fiscal Q3 climbed 14% year over year to $3.23bn, beating the $3.20bn consensus.

Adjusted earnings per share also soared 25% year over year to $2.57, 16 cents above the $2.41 pre-report estimates.

Adobe’s CFO John Murphy said that Q3 is traditionally a “slow quarter” for the company but that its digital tools had been particularly popular with SMEs and in the education sector since the pandemic started.

CEO Shantanu Narayen also hailed Adobe’s best ever Q3 performance.

He added: “We are confident that our leadership in the creative, document, and customer experience management categories will drive continued momentum in 2020 and beyond.”

Adobe followed up with strong guidance for fiscal Q4.

It expects revenue and earnings to increase again to $3.35bn and $2.64 per share, respectively.

Analysts were happy with the solid results from the San Jose-headquartered company.

BMO Capital Markets saw fit to add $25 to a new $560 price target and reiterate an outperform rating.

JPMorgan is also bullish, pivoting from a $430 price target to a $550 price target.

Analysts at the firm expect the company’s digital media business to drive growth.

Adobe shares traded 3% higher after hours on Tuesday, but it could not hold onto those gains on Wednesday.

At just after midday on the Nasdaq, ADBE was down 2.81% for the session at $483.60.

Despite the modest retreat, Adobe stock has advanced 51% for the year to date against a 5.3% rise for the broader S&P 500 index.

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