Adobe Inc.
ADBE
$242.92
+0.64%
Adobe Inc. is a leading global software company in the Technology sector, specifically within Software - Infrastructure. It is a dominant force in creative and digital experience software, with its core narrative built around providing essential tools for content creation, document management, and digital marketing.…
ADBE
Adobe Inc.
$242.92
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Investment Opinion: Should I buy ADBE Today?
Based on a synthesis of the provided data, the objective assessment leans towards a 'Buy' rating for value-oriented, long-term investors. The core rationale is a profound disconnect between the company's underlying financial strength—evidenced by 12% revenue growth, ~30% net margins, and a forward P/E of 9.2—and its stock price, which is trading near 52-week lows after a ~30% decline. While near-term sentiment and technicals are poor, the valuation appears to price in an excessively pessimistic scenario. This assessment is based on the data provided and is not personalized financial advice.
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ADBE 12-Month Price Forecast
The AI assessment is neutral with medium confidence. While the valuation is compelling and fundamentals are strong, the near-term path is clouded by significant leadership and sentiment overhangs. The probability-weighted outlook suggests a base case for moderate recovery over 12 months.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Adobe Inc.'s 12-month outlook, with a consensus price target around $315.80 and implied upside of +30.0% versus the current price.
Average Target
$315.80
8 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
8
covering this stock
Price Range
$194 - $316
Analyst target range
Data not available. The provided analyst data includes estimated EPS and revenue averages but does not contain a consensus target price or a distribution of ratings (e.g., Buy, Hold, Sell). Therefore, a summary of Wall Street analyst consensus regarding target price and ratings cannot be provided based on the given inputs.
Bulls vs Bears: ADBE Investment Factors
Adobe presents a classic case of strong fundamentals clashing with severe technical and sentiment-driven weakness. The company maintains excellent profitability, cash flow, and market leadership, but the stock is being punished by fears of AI disruption, a CEO transition, and broader SaaS sector sell-offs. The current price near 52-week lows creates a significant valuation disconnect.
Bullish
- Strong Profitability Margins: High net margin of 29.5% and operating margin of 36.6% demonstrate efficient earnings conversion.
- Robust Free Cash Flow: TTM free cash flow of $10.3B provides significant financial flexibility and liquidity.
- Undervalued on Forward Earnings: Forward P/E of 9.22 and PEG ratio of 0.55 suggest potential undervaluation relative to growth.
- Dominant Market Position: Leader in creative and digital experience software with essential tools for professionals.
Bearish
- Severe Technical Downtrend: Price down over 30% in 3 months, near 52-week low with -48% max drawdown.
- CEO Transition Risk: Unexpected departure of long-time CEO Shantanu Narayen creates leadership uncertainty.
- AI Disruption Fears: Market concerns that AI could automate core functions and erode subscription models.
- Regulatory and Legal Headwinds: $150M settlement for subscription practices adds regulatory overhang.
ADBE Technical Analysis
The stock has experienced a severe downtrend over the observed period, with the price falling from $351.48 on October 2, 2025, to $243.08 on March 31, 2026, representing a decline of over 30%. The 52-week range is $233.16 to $422.95, placing the current price near the low end of this range, specifically about 4.3% above the 52-week low.
Short-term performance has been extremely weak. The stock is down 30.55% over the last three months and down 7.37% over the last month, significantly underperforming the broader market as indicated by relative strength figures of -25.92 and -2.12, respectively.
Currently, the stock is positioned in deeply oversold territory relative to its 52-week range. The price is approximately 42.5% below its 52-week high of $422.95. The provided data shows a maximum drawdown of -47.96%, indicating the severity of the recent sell-off.
Beta
1.53
1.53x market volatility
Max Drawdown
-48.0%
Largest decline past year
52-Week Range
$233-$423
Price range past year
Annual Return
-37.0%
Cumulative gain past year
| Period | ADBE Return | S&P 500 |
|---|---|---|
| 1m | -10.4% | -3.6% |
| 3m | -27.1% | -4.0% |
| 6m | -29.9% | -2.0% |
| 1y | -37.0% | +16.2% |
| ytd | -27.1% | -3.8% |
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ADBE Fundamental Analysis
Revenue growth remains positive, with the latest quarterly revenue of $6.398 billion representing an 11.97% year-over-year increase. Profitability metrics are strong, with a net margin of 29.5% and an operating margin of 36.6% for the most recent quarter, demonstrating the company's ability to convert sales into earnings efficiently.
Financial health appears solid. The company has a debt-to-equity ratio of 0.57, indicating a moderate level of leverage. Cash flow generation is robust, with free cash flow over the trailing twelve months reported at $10.317 billion and strong quarterly operating cash flow of $2.958 billion, providing ample liquidity.
Operational efficiency is high, as evidenced by a Return on Equity (ROE) of 61.34% and a Return on Assets (ROA) of 18.91%. These figures indicate excellent management effectiveness in generating profits from shareholder equity and company assets.
Quarterly Revenue
$6.4B
2026-02
Revenue YoY Growth
+0.11%
YoY Comparison
Gross Margin
+0.89%
Latest Quarter
Free Cash Flow
$10.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ADBE Overvalued?
Given the company's positive net income, the primary valuation metric used is the Price-to-Earnings (P/E) ratio. The trailing P/E ratio is 19.13, while the forward P/E is 9.22, suggesting the market is pricing in significant future earnings growth. The Price-to-Sales (P/S) ratio is 5.74, and the Enterprise Value to EBITDA (EV/EBITDA) is 14.11.
Peer comparison data is not available in the provided inputs. However, the valuation ratios, particularly the forward P/E of 9.22 and a PEG ratio of 0.55, suggest the stock may be undervalued relative to its expected earnings growth rate, assuming the growth estimates are accurate.
PE
19.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 14x~104x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.1x
Enterprise Value Multiple
Investment Risk Disclosure
The primary risks for Adobe are multifaceted. First, execution and strategic risks are elevated due to the unexpected CEO transition. The departure of Shantanu Narayen after a long and successful tenure introduces uncertainty regarding future strategic direction and operational execution during a period of intense AI-driven industry change. Second, technological and competitive risks are significant, as market sentiment reflects deep fears of a 'SaaSpocalypse' where generative AI tools could disrupt or commoditize aspects of Adobe's core creative software suite, potentially pressuring its premium subscription pricing model. Third, regulatory and legal risks persist, highlighted by the recent $150 million settlement related to subscription practices, which could lead to further scrutiny and impact customer acquisition costs. Finally, macroeconomic and market risks are present, with the stock's high beta (1.53) making it susceptible to broader market downturns, and its recent severe underperformance (-30.55% over 3 months) potentially triggering further technical selling pressure.