Insiders Sell Adobe Ahead Of Earnings
Insiders were selling Adobe (NASDAQ: ADBE) ahead of the Q4 earnings report but it is nothing to be worried about. The selling amounts to a mere $97.75 million, less than 0.03% of the current market cap, and there are no red flags to speak of. Not only were sales spread among a broad array of execs and insiders but total insider holdings are less than 0.25% of the stock. That’s not enough to move the market even if they all sold at once, all other factors being equal. The more important detail is the institutional activity, activity that we see supporting price action in the near, mid, and long-term.
The data from Insidertrades.com shows Institutions have been net buyers all year and nothing about that changed with the release of Q4 results. The activity smacks of rotation but is net positive to the tune of $4.42 billion or about 1.6% of the market cap. That brings total institutional holdings up to 82% with some very noteworthy activity happening after the earnings results were released. Jefferies Group made a small purchase of 12,968 shares establishing them as a holder of record. While small, the purchase was made the day after earnings were released and while price action was confirming support. In our view, this is evidence the institutions still see value in Adobe and there is still some upside to be had.
Lackluster Results And Weak Guidance Weigh On Adobe
The reason for the price target decreases is lackluster results and weak guidance. The company reported $4.11 billion in revenue for a gain of 20.2% over last year but almost exactly in line with the analyst’s estimates. Others in the digital space including cloud services, infrastructure, and the semiconductor complex reported much better than expected and provided positive guidance. The earnings were equally tepid with the $3.20 in-line with the consensus but it was the guidance that really caught the market’s attention. Adobe is guiding both Q1 and FY 2022 revenue and earnings below the market’s consensus sparking a reevaluation of the stock’s price.
“Retirement Secret” Showed 995% Gain Last Time We Shared It
From Stansberry Research | Ad
Central Banks Buying Gold in Record Numbers
Most folks have completely missed the fact that the world's Central Banks have been quietly gobbling up as much gold as they can… Stacking it in their locked vaults on pallets in record numbers.
Find out why right here (and see what you can do to get in too with just a few dollars).
The Analysts Lower Their Targets For Adobe
The analysts maintained their firm Buy rating on Adobe but are lowering their price targets. At least 12 sell-side analysts covering the stock issued price target downgrades that have the consensus at $672 or about 22% above the current price action. The consensus price target is down 2.4% over the last 30 days but still up over the past 90-day and 12-month periods. Within all that, the high price target of $820 set by Atlantic Securities at the end of November still stands. That target assumes about 47% of upside for the stock but we think it may get revised lower before too long.
Analyst Brent Thill of Jefferies thinks Adobe is feeling the effects of "a broader slowdown across the design industry," following a strong year for digital media and tech in general. "The surge in purchases now needs to be digested," said Thill when he left his buy rating unchanged but cut his price target to $680 from $760.
The Technical Outlook: Adobe Is Testing Support
Shares of Adobe plunged in the wake of Q4 earnings and may head lower. Price action set a new low with the move and support at what could become a key level is now being tested. This support is near the $545 level and consistent with a nice-looking continuation pattern formed in June of 2021. Assuming price action is able to confirm support at this level, we see the stock moving sideways in consolidation until some other news comes out. In our view, there is an upside risk in the numbers but it may take some time for it to move the market.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Adobe (ADBE) | $473.44 | -0.8% | N/A | 45.26 | Moderate Buy | $620.72 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
