Shares of Adobe Systems (ADBE) are on the rise after the software company reported better than expected results for the quarter. The announcement sparked positive commentary from several Wall Street analysts, with many raising their price targets on the shares and Wunderlich upgrading the stock to Buy.

RESULTS: Last night, Adobe reported first quarter adjusted earnings per share of 94c and revenue of $1.68B, both above consensus of 87c and $1.65B, respectively. The software company also said first quarter digital media revenue was $1.14B and creative revenue $942M. For the second quarter, Adobe sees adjusted earnings per share of about 94c and revenue of approximately $1.73B, with consensus at 91c and $1.72B, respectively. The company expects to achieve approximately $290M of net new Digital Media ARR, or annualized recurring revenue, in the second quarter, and sees Digital Media revenue growth of roughly 24% and Adobe Marketing Cloud revenue growth of 26%.

ANALYSTS BULLISH AFTER RESULTS: In a post-earnings research note, Wunderlich analyst Ryan Macdonald upgraded Adobe to Buy from Hold and raised his price target on the shares to $145 from $115, saying the company continues to execute at such a high level that a premium valuation is warranted. Additionally, several other analysts upped their targets on the shares. Canaccord analyst Richard Davis raised his price target on Adobe to $145 from $125 as he believes it is "arguably the highest quality" large cap in software. The analyst told investors that he now expects Adobe to beat Salesforce (CRM) to the $100B market cap level by a couple of quarters, probably sometime in late 2021. He reiterated a Buy rating on the shares. Meanwhile, his peer at JPMorgan also raised his price target for Adobe to $145 from $124, while keeping an Overweight rating on the stock, given a strong quarter "with or without some non-recurring items" like some strength in Acrobat perpetual revenue and $10M of gross revenue from legacy TubeMogul contracts. Analyst Sterling Auty argued that Adobe has established itself as a "premier asset" to be owned in technology. Piper Jaffray's Alex Zukin was another analyst who raised his price target on the shares to $160 from $150 given the software company's "strong results." While pointing out that Adobe is "a model of profitable growth" in Enterprise SaaS, the analyst noted that he sees investors benefiting from a combination of continued financial outperformance, multiple expansion, and anti-dilutive share buybacks. Moreover, Zukin believes further upside to this story could come from a multi-cloud ELA package. With Japan being the second largest market for Adobe historically and the conversion story being nascent in the region, the analyst sees a long tail of new conversation customers sustaining future growth as well. He reiterated an Overweight rating on the shares.

NEAR-TERM VALUATION RISK: While Credit Suisse analyst Michael Nemeroff raised his price target for Adobe to $125 from $105, he kept a Neutral rating on the shares. The analyst pointed out that he continues to view Adobe's stack of digital media and digital marketing assets positively, but said he remains concerned about near-term valuation risk as he believes that the current premium valuation of the shares already reflects most, if not all, of its expected growth trajectory.

PRICE ACTION: In morning trading, shares of Adobe have gained about 5.5% to $129.10. At current levels, Adobe has a market capitalization near $64B, while Salesforce currently has a market cap near $59B.