3 Reasons to Buy Adobe's Stock After Its Strong Q2 Report
- Adobe has a sticky ecosystem of industry-leading software Adobe's Digital Media revenue rose 25% year over year to $2.
- Adobe's other businesses also withstood the downturn Adobe's Digital Experience platform provides other cloud-based...
- Adobe has predictable growth at a reasonable valuation
Full Answer
Should you buy Adobe Stock now?
The shares don't look cheap on a price-to-sales basis, either. Its forward valuation has grown from mid-single digits in late March to more than 17 now -- when a ratio of between 1 and 2 is considered good -- so investors clearly expect good things from Adobe going forward.
Is Adobe a good investment?
As a market leader in its industry, Adobe flies a bit under the investment radar but is part of the everyday lives of many people. If you have ever opened a PDF document or edited a photo in Photoshop, you've used an Adobe product.
What's up with Adobe's revenue growth?
This has pushed the company further into compelling growth areas, including marketing, e-commerce, and analytics. In the second quarter, Adobe's revenue grew to a record $3.13 billion, up 14% year over year, while subscription revenue grew to nearly 92% of the total.
How much of adobe's share repurchase power does it have?
Perhaps more impressive is Adobe's share repurchase program. During this time of consistent revenue growth and price appreciation, the company has repurchased approximately $12 billion of its own shares since 2018. At the end of 2021, the company still had $13.1 billion of authority remaining on its share repurchase plan.
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Is it good to buy Adobe stock?
For the full year, Adobe expects its revenue to rise 12% to $17.65 billion, and for its adjusted EPS to increase 8%. That forecast was well below its previous guidance (and analysts' expectations) for 13% revenue growth with a 10% increase in its adjusted EPS.
Why Adobe is a good investment?
Given its subscription-based products, it should be no surprise to investors that Adobe reports the bulk of its sales from recurring revenue. But what's impressive is that the percentage has been increasing over time. In its most recent quarter, subscription revenue represented a whopping 92.9% of its top line.
Is Adobe a good long term buy?
Adobe is a good investment candidate for the long term, if one considers its potential for revenue growth and margin expansion in the long run.
How much will Adobe stock be worth in 5 years?
Based on our forecasts, a long-term increase is expected, the "ADBE" stock price prognosis for 2027-07-07 is 831.916 USD. With a 5-year investment, the revenue is expected to be around +119.02%. Your current $100 investment may be up to $219.02 in 2027.
Does Adobe pay dividends?
Adobe does not pay a dividend.
Will Adobe stock go up?
Stock Price Forecast The 26 analysts offering 12-month price forecasts for Adobe Inc have a median target of 462.50, with a high estimate of 549.00 and a low estimate of 362.00. The median estimate represents a +21.77% increase from the last price of 379.83.
Is Adobe a good stock to buy 2021?
Yet, ADBE stock has fallen sharply since November of 2021 — but that's good news for contrarian tech-market investors. There is no disputing that Adobe is a leader in the document cloud market. It's a lucrative segment that is expected to reach around $21 billion in 2023 and roughly $32 billion in 2024.
What will Adobe stock be worth in 10 years?
What will Adobe stock be worth in 10 years? The Adobe stock could be worth anything between $1,410 and $1,490 in the next 10 years.
What is the target price for Adobe?
Stock Price Target ADBEHigh$549.00Median$462.50Low$362.00Average$463.84Current Price$379.86
Is Adobe undervalued?
Adobe Inc. operates as a diversified software company worldwide. Undervalued with excellent balance sheet.
1. Strong and consistent financial performance
Adobe reported its fourth-quarter and fiscal year earnings in December. For 2021, revenue and operating income increased year over year by 23% and 37%, respectively.
2. Room to grow
The past success of the business should give investors confidence that with continued opportunity, Adobe should be able to execute. To that end, management thinks there's plenty of room to grow. The company believes the total addressable market (TAM) for its Creative Cloud products (Photoshop, Illustrator, etc.) is $63 billion.
3. Operating efficiencies and share repurchases
Further helping the financial performance of the business are the improving business efficiencies. Operating expenses as a percentage of overall revenue have decreased in each of the past two years, falling from 56% in 2019 to 51% in 2021.
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What does YOY mean in Adobe?
Data source: Adobe. YOY = Year over year.
Is Adobe a good stock to buy?
But the market was kinder to mature tech companies that offered predictable returns, stable profits, and reasonable valuations. As a stock that checks all three boxes, Adobe is still a great stock to buy in this fickle market.
Is Adobe still benefiting from digitization?
Those forecasts indicate Adobe will continue to benefit from the digitization of businesses worldwide. It's the same secular tailwind that buoyed shares of salesforce ( NYSE:CRM) and Shopify ( NYSE:SHOP) -- which both compete against parts of Adobe's Digital Experience platform -- throughout the pandemic.
The Valuation Leaves Room for Upside
Usually, when a stock has all the ingredients of a long-term winner like Adobe stock, that stock persistently trades at a premium valuation because investors are willing to pay a premium for all those winning ingredients.
Bottom Line on ADBE Stock
Adobe stock is down 10% over the past few weeks. But, there’s nothing wrong with Adobe stock. The fundamentals remain strong, the valuation remains reasonable, and the optics remain favorable.
How much will the C-commerce market grow in 2021?
In 2017, revenues totaled about $4 billion and are expected to grow at a 3.3% annual rate to $4.7 billion in 2021, according to Statista.
Who bought Magento?
Private equity firm Permira acquired Magento for about $200 million in November 2015 from eBay which bought Magento in 2011 for about $180 million, according to TechCrunch. The Adobe deal should quintuple Permira's investment.
How much has Adobe gained in the past five years?
Adobe has an impressive track record of generating market-beating returns for investors. Over the past five years, the stock has gained more than 430%, but that's just the tip of the iceberg. Investors who have held the stock for the past decade have been rewarded with gains of 1,480%.
When is Adobe's next installment due?
Adobe's debt is spaced out over the coming decade, and the next installment of $500 million isn't due until Feb. 2023. This gives the company plenty of financial flexibility and resources to weather the ongoing financial storm.
Is Adobe a SaaS?
Its suite of software tools are used by creative professionals everywhere, and the company has an impressive track record of revenue growth. Adobe is also one of the original pioneers of software-as-a-service (SaaS), having abandoned cellophane-wrapped physical software disks in favor of monthly subscriptions back in 2012.
Is Adobe stock a good buy?
Is Adobe stock a buy? I'd argue the answer is an unqualified yes. Even at a rather pricey valuation, investors have been willing to pay up for quality. The company's legacy business is still growing at an impressive rate, while its more recent forays into enterprise, e-commerce, and marketing have long runways ahead.
Is Adobe a fluke?
Adobe's record revenue during the quarter wasn't a fluke, either. The company has produced record revenue in every quarter going back more than five years.
Is Adobe stock cheap?
Due in part to its stratospheric rise over the past decade, Adobe stock has never been "cheap." The company sports a price-to-earnings (P/E) ratio of 58, with an only slightly more reasonable forward valuation of 46. To give that some context, the P/E of the S&P 500 sits at about 29.
