Adobe Q1 Earnings Preview: Stock Has Dropped In 5 Of Last 6 Quarters — Here's The Average Decline - Adobe (NASDAQ:ADBE)

Software company Adobe Inc ADBE could highlight its new AI products and how artificial intelligence will help financials and not hurt them when the company reports first-quarter financial results after market close Wednesday.

Earnings Estimates: Analysts expect Adobe to report first-quarter revenue of $5.66 billion, up from $5.18 billion in last year's first quarter according to data from Benzinga Pro.

Adobe posted a rare revenue miss in the fourth quarter, missing analyst estimates for only the second time in the last 10 quarters overall.

Analysts expect Adobe to report first-quarter earnings per share of $4.97, up from $4.48 in last year's first quarter.

Adobe missed analyst estimates for earnings per share in the fourth quarter, which was its only miss in the last 10 straight quarters.

Guidance from the company calls for first-quarter revenue to be in a range of $5.63 billion to $5.68 billion and earnings per share to be in a range of $4.95 to $5.00.

Key Items to Watch: Along with missing estimates in the last quarter, Freedom Capital Markets Chief Global Strategist Jay Woods warns that the last several earnings reports have not been kind to the company's stock.

"Adobe has struggled over its last six earnings reports as it has traded lower on five of those occasions," Woods said in a weekly newsletter.

In those five times shares traded lower, Woods said the stock dropped an average of 8.5%.

"Shares are 25% below their all-time highs set in September of 2024. They have made back half of their losses after their last earnings report and hope that rally back can continue after they release earnings Wednesday afternoon."

Woods said a rally could take shares back to the 200-day moving average around $500, but it would take a strong beat and strong guidance to send shares higher. If shares fall, Woods said a re-test of the $400 level is possible.

"Clearly the set-up from a risk/reward perspective isn't ideal going into the numbers, but there are actionable areas to watch on any move."

The company highlighted strong demand when it reported fourth-quarter financial results, and investors and analysts will hope to hear more of the same on Wednesday.

In February, Adobe announced a new version of its AI Firefly application that is capable of generating video. Adobe described the model as the industry’s first commercially safe AI video generation tool.

Investors and analysts will be looking for an update on new AI products and demand like Firefly in the management commentary.

Ahead of the earnings report, analysts were lowering price targets on the stock. Here are some recent analyst ratings on Adobe and their price targets.

Citigroup: Maintained Neutral rating, lowered price target from $551 to $490
RBC Capital: Maintained Outperform rating, lowered price target from $590 to $500
Wells Fargo: Maintained Overweight rating, lowered price target from $640 to $600
BMO Capita: Maintained Outperform rating, lowered price target from $570 to $515

ADBE Price Action: Adobe stock closed 0.3% lower at $433.66 on Tuesday versus a 52-week trading range of $403.75 to $587.75. Adobe stock is nearly flat year-to-date with shares down 0.4%. Over the last year, the stock has dropped 21.6%.

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