Adobe (ADBE) AI Stock Analysis

• Market Cap: $147.98B
• Dividend Yield: N/A
• Average Volume (3M): 4.34M
• Price to Earnings (P/E): 22.0
• Beta (1Y): 1.15
• Revenue Growth: 10.69%
• EPS Growth: 35.19%
• Country: US
• Employees: 30,709
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 5.31
• Shares Outstanding: 418,600,000
• 10 Day Avg. Volume: 3,474,195
• 30 Day Avg. Volume: 4,343,057
• PEG Ratio: 8.80
• Price to Book (P/B): 16.35
• Price to Sales (P/S): 10.73
• P/FCF Ratio: 29.48
• Enterprise Value/Market Cap: 1.03
• Enterprise Value/Revenue: 6.56
• Enterprise Value/Gross Profit: 7.35
• Enterprise Value/Ebitda: 15.90
• 1Y Price Target: $453.39
• Price Target Upside: 28.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27

• Rating: 79 Outperform
• Price Target: $409.00 ▲(15.69% Upside)

Adobe's overall stock score is driven by its strong financial performance and positive earnings call, which highlight robust growth and strategic focus on AI. While technical analysis shows mixed signals, the company's fair valuation and raised guidance underscore its potential for continued success in the software infrastructure industry.

Positive Factors

AI Integration

Adobe's strategic focus on AI integration across its applications enhances product capabilities and customer value, driving long-term growth.

Digital Media Segment Growth

Continued growth in the Digital Media segment indicates strong demand for Adobe's core products, supporting sustained revenue expansion.

Cash Flow Strength

Robust cash generation supports Adobe's operational stability and provides flexibility for strategic investments and innovation.

Negative Factors

Competitive Pressure in AI Space

Increased competition in AI could impact Adobe's market share and necessitate further innovation to maintain its competitive edge.

Challenges in New Market Adoption

The need for customer education on AI technologies may slow adoption rates, affecting the speed of revenue growth in new markets.

Revenue Growth Deceleration

A slowdown in revenue growth could signal market saturation or increased competition, potentially impacting long-term financial performance.

Adobe Business Overview & Revenue Model

Company Description

Adobe Inc. is a multinational software company headquartered in San Jose, California, known for its innovative products in digital media and digital marketing. The company operates primarily in two segments: Digital Media and Digital Experience. Core products include Adobe Creative Cloud, which encompasses industry-leading design and multimedia software such as Photoshop, Illustrator, and Premiere Pro, as well as Adobe Document Cloud, which includes tools like Acrobat and Adobe Sign for document management and e-signatures. Additionally, the Digital Experience segment offers a suite of analytics, marketing, and advertising solutions, helping businesses optimize their digital engagement.

How the Company Makes Money

Adobe generates revenue primarily through subscription-based services. The Digital Media segment, which includes Creative Cloud and Document Cloud, constitutes the bulk of the company's revenue, with customers paying recurring fees for access to software and services. Adobe's transition to a subscription model has led to a steady increase in Annualized Recurring Revenue (ARR). The Digital Experience segment contributes additional revenue through its suite of marketing and analytics solutions, which businesses purchase to enhance their digital marketing efforts. Furthermore, Adobe establishes strategic partnerships with various enterprises and technology companies, enhancing its market reach and driving sales through integrated solutions. The company's focus on innovation and expansion into new markets, such as artificial intelligence and machine learning, also plays a significant role in its revenue growth.

Adobe Financial Statement Overview

Summary

Adobe demonstrates strong financial health with high profitability, efficient capital management, and robust cash generation. Despite a slowdown in revenue growth, the company maintains a solid financial position with moderate leverage and strong returns on equity.

Income Statement

Adobe's income statement reflects strong profitability with a high gross profit margin of 89.25% and a net profit margin of 30.39% in TTM. Revenue growth is steady at 2.57% TTM, indicating consistent performance. EBIT and EBITDA margins are robust at 37.82% and 41.61% respectively, showcasing effective cost management. The company demonstrates solid revenue growth over the years, though the pace has slowed recently.

Balance Sheet

Adobe maintains a healthy balance sheet with a manageable debt-to-equity ratio of 0.57 TTM, reflecting moderate leverage. The return on equity is impressive at 55.19% TTM, indicating efficient use of equity capital. However, the equity ratio is not explicitly provided, which limits a full assessment of asset financing.

Cash Flow

Adobe's cash flow statement is strong, with a free cash flow growth rate of 1.72% TTM and a high operating cash flow to net income ratio of 1.06. The free cash flow to net income ratio is also robust at 0.98, indicating efficient cash generation relative to net income. The company shows consistent cash flow growth, supporting its operational stability.

Breakdown	TTM	Dec 2024	Dec 2024	Dec 2023	Dec 2023	Dec 2022
Income Statement
Total Revenue	23.18B	21.50B	21.50B	19.41B	19.41B	17.61B
Gross Profit	20.66B	19.15B	19.15B	17.05B	17.05B	15.44B
EBITDA	9.56B	7.96B	7.96B	7.78B	7.78B	7.05B
Net Income	6.96B	5.56B	5.56B	5.43B	5.43B	4.76B
Balance Sheet
Total Assets	28.75B	30.23B	30.23B	29.78B	29.78B	27.16B
Cash, Cash Equivalents and Short-Term Investments	5.94B	7.89B	7.89B	7.84B	7.84B	6.10B
Total Debt	6.64B	6.06B	6.06B	4.08B	4.08B	4.63B
Total Liabilities	16.98B	16.13B	16.13B	13.26B	13.26B	13.11B
Stockholders Equity	11.77B	14.11B	14.11B	16.52B	16.52B	14.05B
Cash Flow
Free Cash Flow	9.60B	7.82B	7.82B	6.94B	6.94B	7.40B
Operating Cash Flow	9.79B	8.06B	8.06B	7.30B	7.30B	7.84B
Investing Cash Flow	-1.02B	149.00M	149.00M	776.00M	776.00M	-570.00M
Financing Cash Flow	-11.01B	-7.72B	-7.72B	-5.18B	-5.18B	-6.83B

Adobe Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 353.52
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADBE, the sentiment is Positive. The current price of 353.52 is above the 20-day moving average (MA) of 345.87, above the 50-day MA of 351.67, and below the 200-day MA of 385.30, indicating a neutral trend. The MACD of -0.78 indicates Negative momentum. The RSI at 54.57 is Neutral, neither overbought nor oversold. The STOCH value of 80.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ADBE.

Adobe Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	―	$3.89T	38.38	33.28%	0.63%	14.93%	15.50%
ADBE	―	$147.98B	22.02	52.87%	―	10.69%	35.19%
PLTR	―	$438.01B	613.59	15.30%	―	38.79%	78.37%
ZS	―	$51.13B	―	-2.70%	―	23.31%	31.04%
SNPS	―	$86.22B	36.34	6.61%	―	3.21%	31.64%
ORCL	―	$807.71B	65.59	71.15%	0.67%	9.67%	11.23%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Adobe Corporate Events

Adobe’s Earnings Call Highlights Record Growth and AI Advancements

Adobe Systems Incorporated’s recent earnings call painted a picture of robust growth and strategic advancements, underscored by record revenue figures and strong AI integration. The sentiment was largely positive, driven by high customer adoption and innovation, though tempered by challenges related to competitive pressures in the AI space and the need for ongoing customer education on new technologies.