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Adobe is scheduled to report earnings after the closing bell Thursday, with traders anticipating a big move from the Photoshop maker's stock following the results.1
Based on current options pricing, Adobe (ADBE) shares are seen swinging up to 8.5% in either direction by the end of the week. A move of that size from Tuesday's close could see shares rise as high as $258, recovering some of their recent losses, or drag them down to $217, which would be their lowest level since early 2019.
Adobe shares have given up nearly a third of their value since the start of the year, and more than 40% in the last 12 months, as worries about AI disrupting the software market have battered the stock. The shares were also pressured following Adobe's last earnings report in March, when the company announced longtime CEO Shantanu Narayen will step down once a successor is found.
Thursday's report will give Adobe executives their latest chance to convince investors that their business is not being substantially disrupted by developments in AI products.
Jefferies analysts said that investors will likely focus on the company's CEO transition and any changes to Adobe's outlook.2 Citi analysts, who said they are "cautious" ahead of the report, voiced some concern about risks to Adobe's full-year forecasts from growing competition.3
Adobe is seen reporting fiscal second-quarter revenue of $6.45 billion, up about 10% year-over-year, along with adjusted earnings per share of $5.81, up from $5.06 a year ago, according to Visible Alpha estimates.
Of the eight analysts with current ratings tracked by Visible Alpha, three have recommended selling the stock, with five neutral ratings. Their mean target around $270 would suggest a close to 14% rise from Tuesday's close, but is still more than a fifth below where the stock started the year.
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