Adobe Share Price Forecast March 2022 – Time to Buy ADBE?
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Shares of American multinational computer software company Adobe (NASDAQ: ADBE) are in the green today, after closing at $432.14 as of March 14th (19:59 EDT). Adobe shares dipped after the company released its first-quarter earnings report. However, Adobe’s second-quarter guidance from its management missed forecasts by Wall Street.
Adobe- Technical Analysis
Adobe’s financial statement indicates a market cap of $204.122 billion with total assets worth $25.976 billion. Revenue for 2021 for $15.80 billion with a profit margin of 30.52% compared to $12.87 billion in 2020. Revenue rose by 9% year over year to reach $4.26 billion, exceeding analysts’ estimates by $20 million. Adjusted net income increased by 6% to $1.6 billion or $3.37 per share. The company expects revenue to grow by 13% year-over-year while adjusted earnings per share are expected to grow 9%.
Oscillators such as Relative Strength Index (14)(43.20), Stochastic %K (14, 3, 3)(49.02), Commodity Channel Index (20)(−76.25) and Average Directional Index (14)(33.21) are neutral. Moving averages such as Exponential Moving Average (10)(440.92), Simple Moving Average (10)(436.47), Exponential Moving Average (20)(447.28), Simple Moving Average (20)(445.31) and Exponential Moving Average (30)(457.02) are neutral.
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Recent Developments
Adobe revenue increased by 23% to $15.79 billion in fiscal 2021. Its two segments did very well. For instance, its Digital Media business, grew its revenue 25% to $11.52 billion, while Its Digital Experience revenue, rose 24% to $3.87 billion. Therefore the adjusted revenue growth of 17% in Q1 is indicative that the company had a slow start. Its gross margin fell 60 basis points to reach 88%, while its operating margin dipped 10 basis points to 37.1%. The main reasons for the decline are uneven comparisons to its travel and facilities spending throughout the pandemic.
In response to the recent Russia-Ukraine crisis, Adobe decided to shut down its businesses in both Russia and Belarus. The exit from these markets will reduce annual revenue by almost $75 million, which only represents about 0.4% of its projected revenue. During the conference call, the company’s guidance for 13% suggests that the slowdown will persist even as the company rolls out new products. It also announced a new product launch and a price hike.
Adobe recently launched a new web and mobile-based version of its flagship platform that targets students, social media influencers, and small businesses – Creative Cloud Express. The company expects the new service to expand beyond its core market. The company plans to raise its price for the product in its first pricing adjustment in the last 5 years.
Should You Buy ADBE Shares?
The company now expects to generate stronger tailwinds in the second half of the year due to its new product launches and pricing tiers. It’s true that Adobe’s valuation seems high compared to its peers and growth rates. Its slightly high premium is justified by its stable profits, the widespread adoption of its industry-standard media tools, and the stickiness of its cloud-based subscriptions.
Many analysts believe that Adobe’s growth will cool off in 2022. However, that doesn’t mean that Adobe won’t remain a solid blue-chip tech stock for the future. Adobe’s new products are representative of its innovation, while the latest price hikes indicate that the company still has pricing power in this market. The best thing for investors right now to do is to buy Adobe shares while ignoring the near term headwinds. They should simply focus on its long-term growth potential.
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