Analyst Note| Dan Romanoff, CPA |
Wide-moat Adobe reported strong first quarter results, including upside to guidance for both revenue and non-GAAP EPS, and provided quarterly guidance that was ahead of Street expectations. Importantly, management also raised its full year outlook. The company announced CFO John Murphy will be retiring this year for personal reasons and a search is underway for a successor. We see strength on all fronts of quarterly performance. New customer engagement levels remained strong and activity on adobe.com remains elevated as a result of the extended remote work environment. We think results continue to support our investment case that Adobe will continue to dominate the creative segment, and its well-rounded portfolio, including Magento and Marketo, position the firm as a digital marketing leader. Given results and guidance, we are raising our fair value estimate to $520 per share, from $500. As software has lagged early in 2021, we see shares as increasingly attractive.