Adobe (ADBE) has been a dominant force in media creation since it was founded in 1982 and released postscript the first international standard for computer printing and sparking the desktop printing revolution. The company has seen massive success with its digital content creation package creative suite, and since moving to a SaaS (Software as a Service) model in 2012 has seen revenue have a compound annual growth of 18%.

Full Report

Adobe Systems Incorporated

[NASDAQ:ADBE] IEX Cloud some other info

13 November 2020

Company Overview

Adobe has been a dominant force in media creation since it was founded in 1982 and released postscript the first international standard for computer printing and sparking the desktop printing revolution. The majority of Adobe’s revenue comes from licencing both digital creation packages and digital experience management software. The firm also offers education and support services.

The company has seen massive success with its Digital Media segment. Revenue for the segment is split into Creative Cloud Adobe’s media creation platform, originally Creative Suite, Creative Cloud was launched in 2012 and moved Creative Suite to a SaaS model boosting AAR and Revenue stability. Digital Media also includes Document Cloud containing both Acrobat and E-sign.

Adobe’s second revenue segment is Experience Cloud which comprises of products, services, and solutions for creating, managing, executing, measuring, monetising and optimising customer experiences from advertising to commerce. Experience Cloud allows Adobe to capture the full marketing production and execution flow from creation with creative cloud and execution, management and analytics with Experience Cloud.

Market Capitalization

$275.47B


Forward PE

40.00

&nbsp
TTM Revenue

$15.1B

Net Profit
Margin

38.70%

LMCR

Price Target

$600.00

Investment Thesis

Adobe has seen a significant markup in valuation so far this year of 43%. I believe this growth is set to continue into 2021 and view Adobe as Overweight with a price target of $600.00, implying a 30% upside.

 

Adobe is in a prime position to take advantage of both low rates and its strong cash generation to leverage Acquisitions going into 2021, further expanding its customer base, especially in Experience Cloud. Adobe’s dominant position in the digital media creation space puts it in a prime position to take advantage of a rapidly expanding market of social media and short-form content with limited competition. Adobe is likely to see some headwinds in investor return over the coming six months from an investor move out of large-cap tech into more cyclical names as economic and virus conditions improve. Adobe may also face currency headwinds from Europe and the middle east (30% of revenue) as the dollar continues to weaken.

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