Adobe Share Price Forecast December 2021 – Time to Buy ADBE?
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Shares of software company Adobe (NASDAQ: ABDE) are in the red today, after closing at $614.86 as of December 14th (19:59 EST). ADBE shares were down 7.6% yesterday after JPMorgan Chase stock analyst Sterling Auty, who downgraded the stock to neutral and put a $680 one-year price target.
Adobe – Technical Analysis
The financial statement released by Adobe indicated that the market cap of the company is at $292.55 billion with total assets worth $26.144 billion. Revenue for 2020 was at $12.87 billion with a profit margin of 40.89% compared to $11.13 billion.
Moving averages for Adobe, such as Exponential Moving Average (10)(644.63), Simple Moving Average (10)(643.11), Exponential Moving Average (20)(649.61), Simple Moving Average (20)(657.93) and Exponential Moving Average (30)(649.30) are indicating a sell action. Oscillators such as Stochastic RSI Fast (3, 3, 14, 14) (38.09), Williams Percent Range (14)(−83.55), Bull Bear Power(−58.91) and Ultimate Oscillator (7, 14, 28)(49.25) are neutral.
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Recent Developments
Adobe operates in three segments, notably – digital media, publishing and advertising, and digital experience. It earned almost $3 billion in the third quarter during the third quarter. Adobe is armed with products such as Photoshop, Acrobat, and Premiere Pro and has more than 20 apps overall. Adobe’s creative cloud allows users to collaborate and link all the above apps. The fastest growing digital media segment reported a 26% year-over-year growth last quarter and contributes 24% of Adobe’s total revenue. Its last segment, publishing and advertising includes software licenses and printing technology. This segment has been losing revenue but only makes up 3% of the total company revenue.
Adobe’s revenue is based on a subscription model which creates a purchasing cycle for clients. Revenue from subscriptions increased by 24% in the third quarter and had an impressive gross margin of 91%. On September 3rd, Adobe fixed a share repurchase authorization of up to $13.1 billion expiring in 2024. Investors should be surprised if Adobe asks for another approval for more repurchases once this authorization is complete. The company’s free cash flow has been impressive at $6.6 billion which translates to a 44% free cash flow margin.
There is a great need for Adobe to develop new revenue streams that will maintain the growth rate it is known for. Its highest grossing segment, Adobe Document Cloud grew 31% in the 3rdquarter and is competing with the likes of DocuSign. There is no doubt that the digital signature industry and cloud document management benefited from the pandemic.
Should You Buy ADBE Shares?
Investors should always take stock predictions with a grain of salt, and this applies to Adobe. The company is expected to report its fiscal 2021 fourth-quarter earnings on Thursday. Q3’s fiscal reports indicated that its revenue rose by 22% year over year which led management to predict a 20% growth for Q4. Adobe’s profitability normally grows at a much faster rate compared to its revenue. Adobe’s management will also provide its initial guidance for fiscal 2022. The demand for creative software isn’t dying down any time soon, with digital creators beginning to build next-gen experiences for the web, streaming video services, and the workplace.
All of this bode well for Adobe’s success as it has built itself into a hub for digital transformation. While 2022 won’t be the breakthrough year for the company, investors can still buy the shares in anticipation of long-term growth.
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