Adobe Systems (NASDAQ:ADBE) sets up positively into the second quarter, according to Barclays analysts, who raised the firm's price target on the stock to $485 from $385, maintaining an Equal-Weight rating in a note Tuesday.
The analysts said the firm is modeling ~$420 million in Digital Media net new ARR for ADBE and believes "an upside scenario could be $440-445M based on historical upside, seasonality, and most importantly that web traffic has returned to y/y growth for the first time since 2Q21."
"On digital experience, we are modelling 2Q revenue of $1.22B off of solid checks and what sounds like competitive strength for Adobe and better renewal rates - this combined with growing AEP contribution could support the 2H accelerating y/y growth rates that some have nit-picked," they added.
The analysts also commented Adobe's operating margin will likely be down q/q on higher merit costs and Summit expenses, but they would not be surprised to see any topline beat fall to the bottom line.
"Overall, we think ADBE sets up for another quarter of consistent execution," concluded the analysts.