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Omar Venerio
Omar Venerio
Articles (1710) 

Wednesday Morning Market Highlights

US markets green, shares of Adobe fall on earnings report

US Markets

U.S. stocks were in the green on Wednesday, with investors expecting continued low rates to be announced on the Federal Open Market Committee's (FOMC) September monetary policy statement. The Dow gained 0.26% to 28,069, the S&P 500 index rose 0.27% to 3,410 and the Nasdaq Composite Index was up 0.19% to 11,211.

Gainers

• Tapestry, Inc. (NYSE:TPR) +8.3%

• FedEx Corporation (NYSE:FDX) +7.5%

• Under Armour, Inc. (NYSE:UA) +3.2%

• Kohl's Corporation (NYSE:KSS) 0.9%

Losers

• Wynn Resorts, Limited (NASDAQ:WYNN) -5%

• Tesla, Inc (NASDAQ:TSLA) -2%

• Host Hotels & Resorts, Inc. (NYSE:HST) -0.7%

• BorgWarner Inc. (NYSE:BWA) -4.5%

Global Markets

The main European stock markets traded in the red. The UK's FTSE 100 lost 0.71%, France's CAC 40 fell 0.54%, Germany's Dax was down 0.11% and Spain's Ibex 35 retreated 0.06%.

In Asia, Japan's Nikkei 225 gained 0.09%, India's BSE Sensex advanced 0.66%, Hong Kong's Hang Seng fell 0.03% and China's Shanghai Composite was down 0.36%.

Adobe releases earnings report

Shares of Adobe Inc. (NASDAQ:ADBE) fell 1.3% on Wednesday morning after the company announced its fiscal third-quarter 2020 results the previous day. The company posted earnings per share of $2.57, beating analysts' estimates by 16 cents. Revenue of $3.23 billion grew 14.1% year-over-year and also beat expectations by $70 million.

CEO Shantanu Narayen had the following to say:

"Adobe delivered the best Q3 in our history in a challenging macroeconomic environment, demonstrating the global demand for our innovative solutions….We are confident that our leadership in the creative, document and customer experience management categories will drive continued momentum in 2020 and beyond."

By segments, revenues on Digital Media were $2.34 billion, up 19% year-over-year. Creative revenue grew to $1.96 billion, a 19% year-over-year growth. Document Cloud revenue was $375 million, a 22% year-over-year growth. The Digital Media Annualized Recurring Revenue rose $458 million to $9.63 billion compared to the second quarter, representing a 24% year-over-year growth on a constant-currency basis.

On the Digital Experience segment, revenue was $838 million. Digital Experience subscription revenue was $729 million, a 7% year-over-year growth. Digital Experience subscription revenue, excluding Advertising Cloud revenue, was up 14% year-over-year.

GAAP operating income reached $1.07 billion and non-GAAP operating income was $1.40 billion.

Adobe generated $1.44 billion of cash flows from operations and repurchased approximately 1.5 million shares during the trimester.

Ken Fisher (Trades, Portfolio) added 4% to his investment in the stock for a total of 5,344,469 shares, while Ken Heebner (Trades, Portfolio) increased his holdings by 2% to 51,000 shares. Joel Greenblatt (Trades, Portfolio) almost doubled his long position to 20,288 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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