RBC Capital Cuts Adobe Systems to Sector Perform

Analyst Robert Breza says Adobe may be seeing signs of product cycle maturation

RBC Capital Markets downgraded Adobe Systems (ADBE) to sector perform from outperform, after the company recently reported quarterly results.

The company said it had 17 cents earnings per share (under Generally Accepted Accounting Principles) in the first quarter, compared to 30 cents in the same period of last year.

Analyst Robert Breza says non-GAAP EPS of 32 cents in the first quarter beat his 29 cents estimate, but he remains concerned about the company's guidance. He says its second quarter revenue/EPS guidance of $655 million/31 cents (mid point) was below prior Street estimates of $675 million/32 cents. Among other things, he thinks Adobe Systems may be seeing signs of product cycle maturation. He thinks there's a lack of near term upside and reduced visibility.

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