Adobe beats analyst estimates on both earnings and revenue.
The company’s weak Q2 guidance is the main reason for today’s sell-off.
The stock needs positive catalysts or additional support from the general market rebound to break the current downside trend.
Adobe Stock Falls On Weak Guidance
Shares of Adobe gained downside momentum after the company released its quarterly report. The company reported revenue of $4.26 billion and adjusted earnings of $3.37 per share, beating analyst estimates on both earnings and revenue.
While Adobe managed to beat analyst estimates, the report did not provide support to the stock, which made an attempt to settle below the $427 level.
The market ignored the company’s quarterly results and focused on Adobe’s guidance for the second quarter. The company expects to report revenue of $4.36 billion and adjusted earnings of $3.30 per share, below analyst estimates.
What’s Next For Adobe Stock?
Analysts expect that Adobe will report earnings of $13.78 per share in 2022 and earnings of $16.26 per share in 2023, so the stock is trading at 26 forward P/E for 2023.
This is not expensive for Adobe stock, which touched highs near the $700 level back in November 2021, and has already lost almost 40% of its value since then. However, concerns about slowing growth may push the stock even lower.
The market is worried about aggressive rate hikes from the Fed, so traders are very sensitive to guidance from tech companies. The second-quarter revenue and earnings forecast from Adobe shows that no growth is expected, which is bearish for the stock.
It should be noted that the near-term dynamics of Adobe stock will also depend on general market mood. The recent rebound of S&P 500 provided significant support to Adobe shares. In case this rebound continues, Adobe stock may get some support despite its disappointing second-quarter guidance.
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This article was originally posted on FX Empire