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Adobe Inc ADBE

Morningstar Rating
$504.60 +0.20 (0.04%)
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Company Report

Adobe Earnings: Guidance Is Needlessly Unclear, but We Believe the Big Picture Is Largely Unchanged

We are maintaining our fair value estimate of $610 per share after Adobe reported good first-quarter results, but offered perplexing guidance for the second quarter that is ultimately slightly disappointing. The problem with guidance is threefold in our opinion. First, management refused to simply reiterate its full-year outlook for net new annual recurring revenue, which it repeatedly said it “felt really good” about. Second, it implies the second half of the year will be even more back-end-loaded. Third, multiple moving parts made the outlook overly confusing. We think these factors are driving a steep after-hours selloff. However, given recent pricing actions that should roll out in the rest of the world, pending important product launches, and rapid generative artificial intelligence adoption, we are not making material changes to our model and think shares are back in the “attractive” category.

Price vs Fair Value

ADBE is trading at a 17% discount.
Price
$507.23
Fair Value
$455.00
Uncertainty
High
1-Star Price
$156.20
5-Star Price
$659.00
Economic Moat
Hynmx
Capital Allocation
Gccthlwwp

Bulls Say, Bears Say

Bulls

Adobe is the de facto standard in content creation software and PDF file editing, categories the company created and still dominates.

Bears

Momentum is slowing in Creative Cloud after elevated growth driven largely by the model transition to SaaS.

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News

Trading Information

Previous Close Price
$504.40
Day Range
$500.26509.00
52-Week Range
$331.89634.59
Bid/Ask
$504.04 / $504.98
Market Cap
$226.06 Bil
Volume/Avg
3.9 Mil / 3.8 Mil

Key Statistics

Price/Earnings (Normalized)
30.11
Price/Sales
11.59
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
2.06%

Company Profile

Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers for creating, managing, delivering, measuring, optimizing and engaging with compelling content multiple operating systems, devices and media. The company operates with three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products (less than 5% of revenue).
Sector
Technology
Industry
Software - Infrastructure
Stock Style Box
Large Growth
Total Number of Employees
29,945

Competitors

Valuation

Metric
ADBE
CRM
MSFT
Price/Earnings (Normalized)
30.1136.5538.04
Price/Book Value
14.774.9013.12
Price/Sales
11.598.5013.80
Price/Cash Flow
33.0922.6530.07
Price/Earnings
ADBE
CRM
MSFT

Financial Strength

Metric
ADBE
CRM
MSFT
Quick Ratio
0.930.961.02
Current Ratio
1.051.091.22
Interest Coverage
55.6318.8741.49
Quick Ratio
ADBE
CRM
MSFT

Profitability

Metric
ADBE
CRM
MSFT
Return on Assets (Normalized)
27.01%8.50%19.91%
Return on Equity (Normalized)
49.98%13.87%39.57%
Return on Invested Capital (Normalized)
38.81%11.66%29.21%
Return on Assets
ADBE
CRM
MSFT
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