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Adobe shares rise following earnings beat

 

Monday, December 19, 2022

The news shaping the markets today

Ukraine’s capital Kyiv was able to restore basic services following recent strikes by Russia. The news sent the safe-haven US dollar slightly lower this morning.


New Zealand’s Performance of Services Index declined to 53.7 in November, versus 57.1 in October. However, the services sector remaining in the expansion zone lent support to the NZD/USD forex pair.


Colombia’s central bank raised its benchmark interest rate by 100bps to 12%, in-line with market expectations. The news sent the COP/USD pair higher in forex trading this morning.


China’s authorities announced plans to increase consumption at a key economic policy meeting, sparking prospects of higher energy demand, which sent the WTI crude oil prices higher.


US S&P Global services PMI dipped to 44.4 in December, from 46.2 in the prior month. This sent the Dow Jones index lower by more than 280 points on Friday.

 

What’s happening: Shares of Adobe gained on Friday, after the company released results for its fourth quarter.

What happened: The digital media and marketing software company posted higher-than-expected earnings for the quarter.

Several analysts also revised their price targets for Adobe following the release of results.

How were the results: The San Jose, California-based company reported double-digit growth in sales for the period ended December 2.

  • Revenues grew 10% year-over-year to $4.53 billion, in-line with the consensus estimates.
  • Earnings came in at $3.60 per share, ahead of Street expectations of $3.50 per share.

Why it matters: Adobe is looking to expand its user base with its $20 billion acquisition of Figma, announced in September. The company expects the acquisition to be completed next year, with regulators still reviewing the transaction.

Adobe disclosed plans of eliminating approximately 100 jobs from its sales department. This was much lower than the job cuts announced by other big tech firms, like Amazon and Meta Platforms.

Adobe’s digital media sales grew 10% to $3.3 billion during the quarter, while revenues from its digital experience division climbed 14% to $1.15 billion.

For the fiscal first quarter, Adobe projected revenues of $4.60-$4.64 billion, broadly in-line with analyst expectations. Management also guided to earnings of $3.65-$3.70 per share, higher than the consensus estimates of $3.64 per share.

For the full year, the company projected revenues of $19.1-$19.3 billion, a tad lower than market views of $19.37 billion. The company guided to adjusted earnings of $15.15-$15.45 per share, versus Street expectations of $15.25 per share.

Several analysts, including Piper Sandler, Deutsche Bank, BMO Capital Markets, Morgan Stanley and Mizuho Securities, raised their price targets for the stock on Friday, following the quarterly results.

How shares responded: Adobe’s shares gained 3% to close at $338.54 on Friday, despite the Nasdaq 100 index tumbling more than 100 points. The stock has lost around 7% over the past six months.

What to watch: Investors will keep an eye on the company’s acquisition of Figma, which is expected to boost Adobe’s results in 2023.

The markets today

The Canadian dollar will be in focus today ahead of a couple of economic reports

Context: The CAD/USD forex pair fell on Friday, as traders digested some important economic data.

Details: Several major central banks around the world raised interest rates last week to control inflation. The US dollar rose after the Fed policy announcement.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher by 0.06% to 104.62 on Friday.

A decline in the price for crude oil, one of Canada’s major exports, exerted pressure on the Canadian dollar. WTI crude fell $1.82 to settle at $74.29 per barrel on Friday.

On the economic data front, Canada’s wholesale trade climbed by 2.1% to a record high of C$83.4 billion in October. This compared favourably with the preliminary reading of 1.3% growth and the previous month’s 0.2% decline.

However, new home prices fell 0.2% in November, declining for the third straight month.

The CAD/USD forex pair fell close to 1.37 on Friday, recording losses for the week.

What are expectations: Traders await economic data on producer price inflation and raw material prices from Canada today. Producer prices in Canada, which rose by 2.4% in October, are expected to rise by just 0.9% in November. Analysts expect the raw material price index to rise by 0.4% in November, following a 1.3% increase in the previous month.

Other Markets: European trading indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 1.27%, 0.67%, 1.08% and 1.20%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 136.08 and 136.42 Negative
USD/CHF – 0.9321 and 0.9328 Negative
Gold – 1803.50 and 1805.50 Positive
Platinum  – 1004.46 and 1007.06 Positive
S&P 500 – 3845.98 and 3864.42 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0605, 0.17%) Dow ($33,151, 0.07%) Brent ($79.93, 1.1%)
GBP/USD (1.2180, 0.32%) S&P500 ($3,885, 0.15%) WTI ($75.14, 1.1%)
USD/JPY (136.26, -0.32%) Nasdaq ($11,370, 0.22%) Gold ($1,804, 0.2%)

What else to watch today

Indonesia’s value of loans, Germany’s Ifo business climate indicator, Ifo current conditions indicator and Ifo expectations indicator, Eurozone’s construction output, labour costs and wage growth, UK’s CBI industrial trends orders, Brazil’s Central Bank focus market readout, US NAHB housing market index, China’s foreign direct investment, as well as Argentina’s balance of trade.


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