Fly on WallStreet

Oppenheimer notes ADBE reported solid Q4 results with strength in Macromedia products, Acrobat. Firm says there was less drop-off in CS2 sales, then anticipated (at this point in the product cycle). Firm leaves their forward-looking ests unchanged. Firm says ADBE benefited from demand strength across products and geographies. In particular, Acrobat desktop sales showed strength post-launch (showing stronger growth that Acrobat 7 at this point in the cycle); Macromedia products, particularly FlashLite, has now been shipped on over 150 mln devices worldwide. Firm reiterates that even though the stock, in the past, tended to trade at higher P/E multiples into a product cycle/at peak, underlying earnings growth at ADBE has slowed--yielding a "peak multiple" closer to the levels where ADBE is trading currently... Jefferies continues to think consensus ests for FY07 will move higher, that organic earnings growth will be among the best in large cap software and that visibility to earnings is high headed into the product cycle. Firm raised their tgt to $50 from $45... Prudential continues to believe that ADBE can move to 30X their FY08 non-option expense EPS estimate of $1.89 within a year, or $57, for a 32% upside from last night's after-hours trading level of $43.30. The guidance for F1Q and FY07 was just as they had expected, and they are not changing any of their numbers significantly at this time.

# posted by Broker A @ 8:45 AM