Ahead of the Bell: Adobe
Adobe shares jump on subscriber additions
NEW YORK (AP) -- Adobe Systems jumped 7 percent before the opening bell after reporting that its subscriber base shot higher.
Investors overlooked what was a pretty lackluster quarter, focusing instead on the company's long-term prospects.
The company reported after the closing bell Thursday that fourth-quarter profit shrank as its shift to cloud-based software cut into profitability. Revenue also fell and guidance for the quarter and year fell short of Wall Street projections.
Yet subscription-based revenue jumped 85 percent to $359.7 million, while paid Creative Cloud subscriptions grew 402,000 from the end of the fiscal third quarter, to 1.4 million.
Citi analyst Walter Pritchard backed his "Buy" rating and $66 price target for the stock, saying that the company's subscriber additions beat his expectations of 365,000, helped by the continuations of promotions.
"We continue to want to own the stock for the improvements in visibility the subscription model holds, as well as growth driver in digital marketing," Pritchard wrote.
Jefferies analyst Ross MacMillan also backed his "Buy" rating and $65 price target, saying that despite the disappointing outlook, the company's long-term prospects remain unchanged.
Shares of Adobe Systems Inc. rose $3.51 to $57.50 in premarket trading.
