Adobe lifts profit forecast on tax reform boost

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(Reuters) – Photoshop maker Adobe Systems Inc (ADBE.O) on Monday lifted its adjusted profit forecast for the current quarter and the full year, saying it expects its effective tax rate to decline “substantially” due to the recently enacted U.S. tax reforms.

Adobe said it expects a charge of about $85 million in the current quarter related to taxes on repatriation of foreign earnings and remeasuring deferred tax assets, and a tax rate of 17 percent compared with its previous target of about 9 percent.

But the company raised its current-quarter adjusted profit forecast, which will exclude the charge, to $1.43 per share from $1.27 per share.

Analysts on average were expecting a profit of $1.27 per share, according to Thomson Reuters I/B/E/S.

For fiscal year 2018, the company said it expects adjusted earnings of $6.20 per share, up from its prior forecast of $5.50. Analysts on average were expecting $5.57 per share.

Adobe also said Chief Financial Officer Mark Garrett and General Counsel Mike Dillon would retire this year.

The company’s shares rose 2.6 percent to $203 in after-hours trading.

Reporting by Munsif Vengattil in Bengaluru; editing by Sai Sachin Ravikumar and Savio D’Souza