Adobe Inc (NASDAQ: ADBE) is scheduled to report its financial results for the second quarter on Thursday – after the bell. Ahead of the earnings release, the software stock is up nearly 20% versus its year-to-date low.
Consensus is for ADBE to report $5.8 billion in revenue and as much as $4.97 of earnings on per-share basis. In the same quarter last year, the multinational generated $5.31 billion on $4.48 a share of earnings.
Despite recent surge, Adobe stock is currently down some 7.0% versus the start of 2025.
Cramer shares his view on Adobe stock ahead of Q2 earnings
According to famed investor Jim Cramer, the possibility that Adobe shares pull out of the year-to-date downtrend after Q2 release remains on the table.
However, investors should keep in mind that ADBE stock “would be a flyer” – he argued last night on “Mad Money”.
The former hedge fund manager touted Adobe Inc as an “amazing company” that has empowered creatives and small business globally. However, the intense competition it faces, particularly from upstarts, warrants treating it as a speculative play at current levels, he added.
In short, Cramer remains convinced that Adobe shares may be “worth it” as long as they are bought for “under 20 times earnings”.
His “flyer” comment actually captures the essence: although ADBE shows promise at its current valuation, it remains a high-risk, high-reward investment – not a sure thing. Adobe Inc is a name worth watching, but not one for the faint of heart.
What to expect from ADBE shares after the Q2 release
Adobe Inc enters this earnings cycle at a crossroads. On one hand, core creative products remain strong, AI engagement is accelerating, and valuation metrics (around 20 times forward earnings) suggest potential upside if results and guidance hold firm.
Yet, caution is warranted. Investors have punished the software stock following earnings beats that disappointed forward guidance, with about 12% to 14% post-earnings drop in recent quarters.
Key challenges include slower artificial intelligence monetisation, competitive headwinds, and a stock that remains structurally weak despite broader tech strength.
Therefore, calling Adobe stock a “flyer” as Cramer did last night makes sense given it’s more than a gamble – supported by solid fundamentals and AI tailwinds – but still high-risk due to execution uncertainties and marketplace pressures.
Simply put, investors who invest in ADBE shares here are buying into potential, not certainty.
How Wall Street recommends playing Adobe Inc in 2025
Despite near-term risks, those interested in Adobe Inc should note that it remains an “overweight” rated stock among Wall Street analysts ahead of its Q2 earnings.
The average price target of $485 indicates potential upside of 17% in ADBE stock from current levels. That said, the software stock doesn’t currently pay a dividend to appear even more attractive at writing.
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