Thomas Weisel Ups Adobe Estimates

Analyst Keith Gay says keeps his outperform rating on the software maker

Thomas Weisel raised its estimates on Adobe Systems (ADBE ).

Analyst Keith Gay says better-than-expected third-quarter guidance of 36 cents to 41 cents earnings per share on revenues of $380 million to $400 million stems from strength in Creative Suite and Acrobat products in all major geographic markets. He says this is consistent with his thesis that Creative Suite is driving a longer upgrade cycle.

Gay says the Creative Suite penetration cycle can last at least two more quarters (Adobe is now 2.5 quarters into the cycle), a longer "tail" than the typical Photoshop upgrade cycle of one or two quarters. He raised the 33 cents third-quarter earnings per share estimate to 38 cents, upped the 34 cents fourth-quarter estimate to 36 cents, upped the $1.61 fiscal 2004 (Nov) estimate to $1.68, and raised the $1.72 fiscal 2005 estimate to $1.76.

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