Accept or Decline

Adobe Acrobat (ADBE) is a position
 I have taken, as the technology sector has declined in November. Adobe is a software application, as well as web services which allows users to construct, alter, view, and create files in a portable way. ADBE is up 54% YTD with room to climb 15-20% higher in coming months.

Adobe reports earnings December 9, 2020 and I anticipate another beat on top and bottom line. Last quarter, Adobe reported record quarterly revenues of $3.23 billion, yielding a 14%^. Most impressive was their profit of 2.8B, illustrating how lean and mean their business is. Their cloud presence has put them in prime position to grow different business segments and be a value add for their range of customers. As their debt to equity ratio stands at .35, it positions them to acquire companies  they see fit to grow a lagging segment, as seen in Marketo purchase. I am hoping to learn more about their integration of a customer data platform, utilizing their Adobe Cloud experience.  This could prove to be a valuable B2B service on their platform, attracting more clients and revenues. 

The sell of this stock was due to a wider tech sell off, where investors questioned the multiples these stocks and moved into recovery, or "value" stocks. ADBE stands at a PE of 60 (average 58), which is well deserving based on their continued growth across their platforms. Consensus estimates on upcoming earnings are: EPS of 2.66 and revenues of 3.3B, both representing double digit growth.

Last quarter highlights:

-Document cloud +22%

-Digital Media revenue +24%

-Digital experience subscription +14%

-Record 1.44B in cash flows

-Bought back 1.5M shares in the quarter


My price target is $545.


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