Summary:

  • Adobe (ADBE) traded 6% lower on Friday morning, after posting mixed earnings compared to Wall Street expectations.
  • Based on its market cycles, we believe this period of risk will last into the new year.

The software company reported earnings per share of $1.83 and total revenue of $2.46 billion, compared to analyst estimates of $1.89 and $2.43 billion. While guidance from management exceeded on revenue, it fell short on earnings with $1.60 versus an expected $1.88.

CEO Shantanu Narayen highlighted their recent acquisitions, pointing out that they have, “resulted in record revenue and impressive growth across all our businesses.” The problem of course is that they haven’t helped meet expectations for the bottom line.

The market cycles for ADBE show that it is in the declining phase for the current cycle. As well, it broke below the support point, the level at which it started the cycle. This is another indication of lower prices into next year. Our target is $205 by January.

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.