By Senad Karaahmetovic
TD Cowen analysts reiterated an Outperform rating on Adobe (NASDAQ:ADBE) as they believe the company could deliver better-than-expected earnings next week.
Their checks came back positive and suggest a stronger quarterly performance and CY23 outlook relative to prior quarters. The analysts see net new ARR at $379 million, ahead of the guidance of $375M.
“We expect some upside & continue to view FY23 guide as being conservative w/ room to walk it up. Regarding our sales headcount analysis, data showed modest net loss Q/ Q, with ADBE exiting 1Q with 18% Y/Y growth in employees vs. 26% exiting last qtr, noting that ADBE is one of the few co's in large cap s/w not having had to do layoffs & still supporting solid capacity growth,” they said in a client note.
They also highlighted strong investor interest in the Figma acquisition after Adobe stock fell on the report that DoJ is planning to challenge the deal.
“While uncertainty around the transaction is an overhang, we see the pullback as a buying opportunity especially as we expect a solid qtr against a conservative guide,” they reiterated.
“We found these DM survey results to be encouraging & we would expect marginal upside to ests. In turn, we see durability in its DX business given its large enterprise focus, position to consolidate point tools, stability w/in the infrastructure layer & continued CDP cross-selling,” the analysts concluded.