Adobe, because they will always be fine

Investidea: Adobe, because they will always be fine

Today we have a speculative idea: take stock of software maker Adobe (NASDAQ: ADBE), in order to capitalize on their rebound after a recent fall.

Growth potential and validity: 18% behind 15 Months; 11% per annum during 15 years.

Why stocks can go up: recently they fell hard, and we have reason to believe, that the company will exceed its own growth forecasts next year.

How do we act: we take shares now by 555,47 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

What the company makes money on

Adobe is an internet giant, making content and digital analytics software for marketers. Business analysis was already published a couple of years ago, so we won't repeat ourselves here..

Investidea: Adobe, because they will always be fine

Investidea: Adobe, because they will always be fine

Arguments in favor of the company

Fell down. The company's shares have fallen sharply over the past three and a half weeks.: with 687 to 549,77 $. Think, that we can now pick up these stocks in anticipation of a rebound.

Yes everything is fine. Shares fall on Adobe's expectation of slower growth in financials next year, as well as lower forecasts of large investment banks for technology companies amid higher rates FED.

If we talk about, as for the forecasts of Adobe itself, then in 2022 in Adobe, maybe, will pleasantly surprise shareholders and its results will exceed the bar declared by it. Seems to be, coronavirus will never end, which means, this will lead to a new round of activity as content producers, and digital marketers - both will increase the consumption of Adobe services. Basically, Adobe's long-term business was not the worst before the corona crisis. But still, the pandemic gave acceleration to her business..

What about the situation with the Fed?, then specifically in the case of Adobe, the reasons for investor skepticism are not obvious. Adobe is not a loss-making startup, and the, profitable business with growing revenue, which is on 80% renewable. The company receives it on the basis of subscriptions and regularly renewed contracts., and therefore revenue is easily predicted.

The company's total margin is huge - approximately 30%. And considering, that the growth prospects of this business have not yet been exhausted, the probability of extracting a good return from Adobe shares is very high. So after the fall, these stocks look like a good option for risk-averse investors..

  Bundle of investment news: holiday season and automation of industry

It makes sense to take Adobe now in anticipation of an improvement in its business indicators - and subsequent growth in quotations..

What can get in the way

Price tag. Even after the fall of Adobe, it's not cheap. P / S she has - 16,98, a P / E — about 54,84. So the stock may well fall further, especially if our hopes for the company's financials to grow above forecasts do not come true..

Omnomnom. Adobe is growing, among other things, and by buying up promising startups. Given the high price of these same startups, I would worry about, that Adobe might overpay to buy one of them. Moreover, her bookkeeping is not perfect.: 12,444 billion dollars in arrears, out of which 6,932 billion needs to be repaid within a year. She has 3,844 billion in accounts and 1,878 billion of counterparties' debts. Basically, enough for a living - but any attempts to expand Adobe's business will surely include an increase in debt burden. And given the, that loans will rise in price, this can become a problem and scare away some investors from the company.

What's the bottom line?

You can take shares now by 555,47 $. And then there are two options.:

  1. keep up 650 $, which were asked for these shares quite recently. Think, we will reach this level in the next 15 Months;
  2. keep shares next 10 years, to see, how the company will become Microsoft for designers and marketers.

 

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