Adobe and RingCentral Rise in Pre-Market Trading

Tech earnings continue to move stocks. On Monday, Adobe (ADBE) and RingCentral (RNG) announced their earnings after the market close. While Adobe stock has risen 5% in pre-market trading, RingCentral stock has risen 8% at the time of this writing.

Let’s see how the two tech stocks performed compared to analysts’ estimates.

Adobe reported sales of $2.83 billion

Adobe’s sales in the third quarter rose 24% year-over-year to $2.83 billion. The company reported adjusted earnings of $2.05 in the August quarter. Analysts expected the firm to post earnings of $1.97.

The stock is trading higher due to strong guidance. In the fourth quarter, Adobe expects sales of $2.97 billion with an adjusted EPS of $2.25. While analysts expect sales of $2.97 billion, their earnings estimates are $2.26.

For 2020, Adobe expects sales of $13.15 and an EPS of $9.75. Analysts forecast 2020 sales at $13.14 billion with an EPS of $9.7. In the third quarter, the company’s sales were driven by its Digital Media segment, which rose 22% YoY to $1.96 billion.

Adobe’s forecast for 2020 led to several price revisions, according to multiple reports from The Fly. Jefferies analyst Brent Thill increased Adobe’s target price from $340 to $350 and reiterated a “buy” rating on the stock. Citi (C) analyst Walter Pritchard increased Adobe’s target price from $313 to $31 and reiterated a “neutral” rating.

Adobe stock is trading at $291.3. The stock lost 12% between August and October this year due to concerns about the company’s growth in 2020. The stock has gained 318% in the last five years. Adobe has been one of the outperformers in tech.

RingCentral beats estimates

RingCentral stock is trading higher after it reported sales of $233 million in the third quarter with an EPS of $0.22. The numbers were higher than analysts’ sales estimates of $221.3 million and EPS forecast of $0.19.

In the December quarter, RingCentral expects sales between $238 million and $240 million. The company expects an EPS of $0.21. While the EPS was in line with analysts’ forecast, they expected sales of $237.37 million in the fourth quarter.

The company’s sales rose 34% YoY in the September quarter, while software subscription revenues rose 33% to $211 million. RingCentral’s annualized recurring revenues rose 31% to $881 million.

Jefferies analyst Samad Samana kept a “buy” rating on RingCentral and increased the stock’s target price to $210. Raymond James analyst Brian Peterson increased the stock’s target price from $175 to $195 and reiterated a “strong buy” rating.

Oppenheimer increased the company’s target price from $155 to $200. Meanwhile, Craig-Hallum increased the target price from $150 to $175 due to the better-than-estimated forecast.

Currently, RingCentral stock is trading at $171.7. The stock gained almost 28% on October 4 after the company announced a partnership with Avaya. RingCentral is one of the leaders in the unified communications-as-a-service space. The company provides voice, video, and team messaging services.

RingCentral founder and CEO Vlad Shmunis, said, “We delivered another solid quarter. We are benefiting from continued momentum in mid-market and enterprise markets, with strong contributions from the channel. We continue to drive success with our leading unified voice, video, and team messaging platform.”

He also said, “With today’s announcement of our expanded relationship with AT&T, and the earlier announced strategic partnership with Avaya, we are excited to broaden our global sales reach to help accelerate the transition to the cloud for businesses worldwide.”

The stock has beat the market returns since 2014. RingCentral stock has gained close to 1,300% in the last five years.