Case Study: What Credible analysts are saying on Adobe (ADBE) stock
Key Points
Adobe (ADBE) shares rose by 1.5% this week. They’re down by 40.01% on a year-to-date basis. This compares poorly to the S&P 500 and the Nasdaq, which are down by 19.66 and 31.80% during 2022 thus far, respectively.
Adobe posted Q4 results which showed double digit growth; however, the high price that the company paid for its Figma acquisition continues to weigh on shares.
Adobe posted Q4 results this week, with revenues meeting Wall Street’s expectations and earnings-per-share beating consensus estimates. During the fourth quarter, Adobe posted $4.53 billion of sales and $3.60 of non-GAAP earnings-per-share which was $0.10/share above estimates.
52% of recent articles published by credible authors focused on ADBE shares offer a “Neutral” bias. However, 6 out of the 10 credible credible Wall Street analysts who cover Adobe believe shares are likely to rise in value. The average price target being applied to Adobe by these credible analysts is $368.50, whichimplies upside potential of approximately 8.8% relative to ADBE’s current share price of $338.54.
Geoff Considine, a Nobias 5-star rated author, said: The consensus outlook is for 14.3% annualized EPS growth over the next three to five years.”
Jon Hopkins, a Nobias 4-star rated author, said, “Adobe is seeking to expand its user base to more casual consumers with the acquisition of Figma, announced in September. The deal would be one of the most expensive purchases ever of a private software maker.”
Performance
Event & Impact
Noteworthy News:
Nobias insights
Bullish Take:
Bearish Take:
ADBE Dec 2022
Adobe (ADBE) shares have struggled throughout 2022, down by 40.01%. This compares poorly to the S&P 500 as well as the Nasdaq, which are down by 19.66% and 31.80% on a year-to date basis, respectively. However, more recently, Adobe has posted outperformance. During the prior month, the Nasdaq Composite Index is down by 3.68%. During this same period of time, ADBE shares are down by just 0.75%.
Adobe posted fiscal 2022 fourth quarter earnings this week, helping shares rise by 1.49% during the prior 5 trading sessions. Since Adobe’s Q4 report was published, 5 credible analysts have raised their price targets for shares. Today, the average price target being applied to ADBE shares is $368.50, which implies nearly 9% upside moving forward.
Bullish Nobias credible authors:
Reinhardt Krause, a Nobias 4-star rated author, covered Adobe’s fiscal 2022 Q4 results in an article published at Investors.com. Krause wrote, “Digital media and marketing software firm Adobe on Thursday topped Wall Street's earnings target while revenue met views for its fiscal fourth quarter.” He said, “Adobe said it earned an adjusted $3.60 per share on sales of $4.53 billion in the quarter ended Dec. 2. Also, analysts polled by FactSet expected Adobe earnings of $3.50 a share on sales of $4.53 billion.”
Krause continued, “On a year-over-year basis, earnings rose 12% while sales increased 10%.” Finally, Krause also noted that Adobe provided guidance for the upcoming quarter, stating, “For the current quarter, Adobe predicted adjusted earnings in a range of $3.65 to $3.70 per share on sales of $4.62 billion. Meanwhile, analysts were looking for earnings of $3.64 a share on sales of $4.63 billion in the fiscal first quarter.” Therefore, Adobe’s bottom-line guidance was bullish; however, the top-line projections provided by management missed Wall Street’s expectations.
Bearish Nobias credible authors
Geoff Considine, a Nobias 5-star rated author, recently posted an update on his buy/sell/hold opinion on ADBE shares after having analyzed the company’s recen Q4 report. Considine highlighted the stock’s recent sell-off, writing, “Adobe is a global leader in digital design and document management. The shares got very pricey in 2021, but have fallen 49% over the past 12 months.” He noted that much of the stock’s recent weakness was due to recent M&A activity, writing, “The magnitude and abruptness of the share decline following the announcement of the Figma acquisition can explain much of the decline that's not explained by the falling market for tech shares.”
Considine continued, “As is typically the case for large acquisitions, there are potential regulatory hurdles to the deal closing, but the most common critique that I read was that Adobe was substantially overpaying for Figma.” However, despite the M&A headwinds, he believes that the stock has attractive forward looking growth prospects.
Considine wrote, “The consensus outlook is for 14.3% annualized EPS growth over the next three to five years.” With near-term growth projections in mind, he moved onto the stock’s valuation, saying, “The current forward P/E of 24.3 looks quite reasonable to me.” Considine also mentioned that “The TTM P/E is 32.6, which is the lowest level since 2013.” He finished his report on a bullish note, concluding, “With the Wall Street consensus buy rating and the bullish market-implied outlook to the middle of next year, I'm maintaining my buy rating on ADBE as we approach the Q4 report.”
Jon Hopkins, a Nobias 4-star rated author, also covered Adobe's Q4 report this week, publishing an article at Proactive Investors which put a special emphasis on the pending Figma acquisition. Hopkins said that during its Q4 report, Adobe mentioned that it “expects to complete its $20 billion purchase of Figma next year, despite regulatory reviews in the US, UK and Europe.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Like Considine, Hopkins put a spotlight on the price that Adobe paid for Figma. He wrote, “Adobe is seeking to expand its user base to more casual consumers with the acquisition of Figma, announced in September. The deal would be one of the most expensive purchases ever of a private software maker.”
In his article, Hopkins also quoted Oppenheimer analyst, Brian Schwartz, who came out with a post-earnings report this week which said that although there are concerns about the price that Adobe paid, closing the Figma acquisition would support “Adobe’s leading position in digital creation and marketing”.
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 52% of recent articles published by credible authored tracked by the Nobias algorithm have expressed a “Neutral” bias towards shares. However, the credible Wall Street analysts that Nobias tracks lean bullish. 6 out of the 10 credible analysts that Nobias tracks who have offered an opinion on Abode believe that shares are headed higher. The average price target for ADBE amongst these credible individuals is $368.50. Today ADBE shares trade for $338.54, meaning that the credible analysts’ average price target implies upside potential of 8.8%.
Disclosure: Nicholas Ward is long ADBE. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
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