Adobe Systems Inc. (Nasdaq: ADBE) picked up 5 1/8, or 8 percent, to 68 7/8 Friday, one day after it easily topped analyst estimates in its fourth quarter.
On Friday, Piper Jaffray upgraded the software developer from a "buy" to a "strong buy" while Banc of America Securities reiterated its "buy" recommendation and set a 12-month price target of $90 a share.
However, Bear Stearns actually downgrade Adobe from an "attractive" rating to "neutral."
"With Adobe's restructuring nearly at a close, most upside in fiscal year 2000 would be driven by better than expected revenues -- a task that may prove quite difficult -- versus the bulk of fiscal year 1999, where upside was driven by strong operational controls, as the company moved from a 24.0 percent to 31.5 percent operating margin," it said in a research note.
"In essence, while we have tremendous respect for what management has done over the past year, we believe the low-hanging fruit has been picked and recommend investors hold back from significant purchases at these levels."
In the quarter, Adobe earned 46 cents per share, excluding one-time events. First Call's survey of a dozen analysts predicted a profit of 42 cents per share for the quarter ended Dec. 3.
Also Thursday, Adobe said company co-founder Charles Geschke would step down as president at the end of March. John Warnock, chairman, CEO and co-founder of Adobe, will add the presidential role to his current duties. Geschke will remain on the board, the company said.
Including restructuring and other charges, investment gains and losses from venture programs, an in-process research and development write-off, and a gain from the sale of a corporate facility, Adobe in the fourth quarter earned $97.4 million, or 76 cents per share.
Fourth quarter revenue rose to $281.8 million, from $260.9 millio in the previous quarter and $246.7 million in the year-ago period. Demand for Web-related tools drove the company's growth, said John E. Warnock, chairman and CEO.
Operating profit in the fourth quarter rose to $81.9 million, from $72.5 million a year ago.
For the full year, Adobe earned $237.8 million, including $259.9 million of operating income, on $1.02 billion in revenue. The company has growth targets of 20 percent for revenue and 30 percent for operating profit next year, Warnock said.
Last quarter, Adobe topped analysts' estimates when it raked in $57.2 million, or 80 cents a share, on sales of $261 million. It also announced a 2-for-1 stock split.
Among 14 analysts surveyed by Zack's Investment Research, nine maintain the equivalent of "moderate buy" ratings on Adobe, three rate it a "hold", and two recommend the stock with a "strong buy" rating.>