Author Archives: Scalper1

Adobe Systems Stock Hits New High On Q1 Beat And Raise

Adobe Systems ( ADBE ) stock jumped to an all-time high on Friday, a day after the company beat first-quarter views and raised its sales and earnings guidance for the year. Adobe shares leaped as much as 8.9% to a new high of 98 in early morning trading on the stock market today . By mid-morning trading, Adobe had trimmed the advance to about 5% to below 95. The digital media and marketing software firm late Thursday reported fiscal Q1 earnings per share of 66 cents, excluding items, on sales of $1.38 billion. Analysts polled by Thomson Reuters expected Adobe to report profit of 61 cents, ex items, on sales of $1.34 billion. On a year-over-year basis, non-GAAP EPS was up 50%, and revenue was up 25%. For its fiscal second quarter, Adobe is targeting EPS minus items of 67 cents on sales of $1.39 billion, based on the midpoint of guidance. Analysts were modeling 65 cents EPS minus items on sales of $1.39 billion. For the full year, Adobe now forecasts earnings of about $2.80 a share on a non-GAAP basis and sales of $5.8 billion. Investors are enthused about Adobe’s transition from desktop software to Internet cloud computing services. Adobe has three cloud computing businesses: Creative Cloud, Marketing Cloud and Document Cloud. The biggest is Creative Cloud, which includes software for creative professionals such as Photoshop, Illustrator and InDesign. Marketing Cloud provides online marketing and advertising services. Document Cloud leverages Adobe’s popular online document-sharing product Acrobat and its ubiquitous PDF format. UBS analyst Brent Thill reiterated his buy rating on Adobe stock but upped his price target to 114 from 105. Adobe is “reaping the fruit of a well-orchestrated playbook,” Thill said in a report. The company “is exiting the business model transition phase and entering the normalization phase.” Baird analyst Steven Ashley maintained his outperform rating on Adobe stock but raised his price target to 105 from 100. “Adobe continues to successfully broaden its market,” Ashley said in a report. “Over 30% of Creative Cloud customers are new to Adobe.” Adobe reported much-stronger-than-expected Creative Cloud subscriber growth of 798,000 new customers vs. the consensus forecast of 608,000 in fiscal Q1, which ended March 4. Pivotal Research Group analyst Brian Wieser maintained his buy rating on Adobe stock but bumped up his price target to 109 from 105. Adobe’s Q1 results “demonstrated ongoing growth from existing customers and market expansion from new ones,” Wieser said in a report. RBC Capital Markets analyst Ross MacMillan kept his outperform rating on Adobe stock, but he raised his price target to 104 from 101. “Valuation (is) the only question here, but with estimates moving up and higher recurring visibility, we remain (at) outperform,” he said in a report. Oppenheimer analyst Brian Schwartz reiterated his perform rating on Adobe stock. “We view Adobe as a well-established franchise,” Schwartz said in a report. “Our perform rating on ADBE is based solely on valuation, as we think it fairly prices in sustained strong growth and earnings power for the business” over the next 12 months. Credit Suisse analyst Philip Winslow maintained his neutral rating on Adobe but increased his price target to 85 from 70. “Although Creative Cloud has effectively increased annual revenue per user versus the prior perpetual licensing model, we believe much of this enthusiasm is captured in Adobe’s current valuation,” Winslow said in a report. “Therefore, we will monitor Adobe’s ability to (1) attract new users, (2) increase Creative Cloud pricing, (3) expand operating margins ahead of expectations, and (4) continue to expand into the digital marketing market before turning positive on Adobe’s stock.” Annualized recurring revenue in Adobe’s core Digital Media segment grew to $3.13 billion last quarter, an increase of $246 million. Adobe now expects to exit fiscal 2016 with Digital Media annualized recurring revenue of about $4 billion. That’s up from its prior target of $3.875 billion.

Riskier Bond ETFs For A More Dovish Fed Outlook

By Max Chen and Tom Lydon With the Federal Reserve holding interest rates and only anticipating two rate hikes this year, fixed-income investors may turn to riskier debt securities and related exchange traded funds, reports industry analyst ETF Trends . The Fed’s dovish stance sent the U.S. dollar retreating, with the Dollar Index down about 1.9% since the Fed’s Wednesday announcement. “Any weakening of the U.S. dollar will support emerging markets that have issued U.S. denominated debt and will take pressure off of China’s need to manage their currency,” Matthew Whitbread, investment manager at Baring Asset Management, said on CNBC . “This would bode well for investors able to allocate to select emerging market currencies and local bond markets.” Fixed-income investors may gain exposure to U.S. dollar-denominated emerging market debt through ETF options. For instance, the iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEARCA: EMB ) has a 7.01 year duration and a 5.30% 30-day SEC yield. The PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEARCA: PCY ) has a 8.34 year duration and a 5.90% 30-day SEC yield. The Vanguard Emerging Markets Government Bond ETF (NASDAQ: VWOB ) has a 6.2 year duration and a 4.95% 30-day SEC yield. Year-to-date, EMB rose 3.9%, PCY gained 3.6% and VWOB returned 3.4%. Additionally, with emerging market currencies appreciating against the greenback, local-currency emerging market bond ETFs have also been outperforming. For local currency-denominated emerging market bond ETFs, the iShares Emerging Markets Local Currency Bond ETF (NYSEARCA: LEMB ) has a 4.77 year duration and a 4.73% 30-day SEC yield. The Market Vectors Emerging Markets Local Currency Bond ETF (NYSEARCA: EMLC ) has a 4.76 year duration and a 5.95% 30-day SEC yield. The actively managed WisdomTree Emerging Markets Local Debt Fund (NYSEARCA: ELD ) has a 5.01 year duration and a 5.89% 30-day SEC yield. Year-to-date, LEMB increased 3.7%, EMLC advanced 6.6% and ELD gained 5.3%. “Overall, a more dovish Fed should support risky assets, in particular high yield credit that benefits both from falling yields as well as economic growth,” Whitbread added. For instance, over the past two days, the SPDR Barclays High Yield Bond ETF (NYSEARCA: JNK ) was up 1.7% and the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA: HYG ) was 1.2% higher. JNK has a 4.26 year duration and a 7.28% 30-day SEC yield. HYG has a 4.01 year duration and a 7.26% 30-day SEC yield. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Market Lab Report – Premarket Pulse 3/18/16

Major averages rose yesterday on higher volume as the central bank easy-money script continues to play out. Overall the action remains bullish. Oil rose past $40 a barrel. The correlation between oil and the stock market since the start of the year has been pronounced. A couple of new pocket pivots arose though much of the rally has been from junk-off-bottom and defensive names so buying on pullbacks and keeping stops tight should be a standard approach in helping to keep risk to a minimum. Pocket pivots: Internet-based IT software maker Ebix (EBIX) – pretax margin 32.6%, accelerating earnings. Stock made a strong move after its most recent earnings report. It has had a constructive, low volume pullback. Building products manufacturer Universal Forest Products (UFPI) – earnings are strongly accelerating, institutional sponsorship has grown over the past 4 quarters, group rank 6. This is a pocket pivot breakout so can be bought on a constructive pullback closer to its 10dma.