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Adobe is About to Announce Earnings on Monday, Here’s What to Expect

Adobe is About to Announce Earnings on Monday, Here’s What to Expect

Adobe Inc (NASDAQ: ADBE) has been a strong performer through the pandemic. However, the price has fallen in the past week like many other technology companies. As the price was attempting to rebound on Thursday, the price faded. As investors prepare for their upcoming earnings on Monday after the close, here’s what to expect for their earnings and expected movement on the announcement.

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  • ADBE has a strong history of beating analyst estimates. It has beaten estimates in all of the previous four quarters. Analyst estimates for the current quarter is $2.41 compared to $2.05 in the same quarter a year ago. Analysts are projecting revenue growth for the current quarter of 11.3%.

    Looking at analyst estimates trends over the past 90 days, the trend has been remarkably consistent. This is a reflection the type of business that Adobe is in. Having an online subscription platform is ready-made for the current climate.

    Considering the fact that the company has beaten analyst estimates in the previous four quarterly reports, the price of the stock has only declined following one of the reports.. In every circumstance, the price held its level after the report or increased.

    Looking at the implied volatility for the September option expiration next week you can arrive at an expected move of +/- $40.55. That range represents the one standard deviation or 68.2% probability range. Using this information allows you to understand the likely range of movement following the report.

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  • Given the company’s history and the climate we’re in, it would be reasonable to expect a bullish move over the earnings and look for a $40 move higher. That gives a target of $516.

    Option traders may want to consider looking for a bullish move over earnings and maintain the flexibility to play a bigger move over the coming months. The 20 NOV 20 510/515 long call vertical can be bought for around $1.50 or less.