Adobe is set to report earnings before the open tomorrow
Software name Adobe Inc (NASDAQ:ADBE) is attempting to recover from yesterday's 6.6% drop, sparked by a downgrade from J.P. Morgan Securities to "neutral" from "overweight," while investors look ahead to the firm's upcoming fiscal fourth-quarter earnings report, due out before the open tomorrow, Dec. 16. At last check, ADBE was up 0.9% at $620.39.
J.P. Morgan Securities justified yesterday's bear note by pointing out that the stock was trading at less than 10% from its target price of $680. Depending on tomorrow's results, more analysts may turn to downgrades and/or price target cuts, as the 12-month consensus price target of $715.82 is a relatively slim 16.3% premium to last night's close, and of the 19 analysts in coverage, just one says "hold."
Looking back, Adobe stock is no stranger to bumpy post-earnings price action, breaking down 3.1% after its last report in September. In fact, after half of its last eight quarterly reports, ADBE fell lower, though it did manage an impressive 17.7% next-day pop in March of 2020. This time around, options players are pricing in a 10.8% move for the equity, which is double the 5% move it's averaged over the past two years, regardless of direction.
Support at the 160-day moving average is keeping some of yesterday's losses in check. The trendline captured ADBE's post-earnings pullback in September before launching the stock to a record high of $699.54 on Nov. 22. Year-to-date, the stock sports a solid 22.9% lead.