Adobe: A Leader in Digital Media and Experience
This week’s stock analysis is focused on Adobe (ADBE), a multinational computer software company that has experienced explosive growth over the past three years. With double-digit earnings growth, 10-straight quarterly earnings surprises, and a history of outperforming analysts’ expectations, Adobe is an attractive investment opportunity.
Company Overview
Adobe Systems Incorporated was founded in December 1982 and is headquartered in San Jose, California. The company has specialized in software for the creation and publication of content, including graphics, photography, illustration, animation, multimedia/video, motion pictures, and print. Flagship products include Photoshop image editing software, Adobe Illustrator vector-based illustration software, Adobe Acrobat Reader, and the Portable Document Format (PDF). In addition to its core products, Adobe offers a range of tools primarily for audio-visual content creation, editing, and publishing.
Over the past three years, Adobe has experienced significant growth. The company has reported 14% year-over-year revenue growth and 22.7% year-over-year earnings growth in its fourth quarter fiscal year 2020. Fourth-quarter earnings of $2.81 per share topped analysts’ estimates for $2.66 per share.
Powerful Sales Growth
Adobe’s powerful sales growth is a key driver of the company’s success. The company has expanded its operating margin, and its history of outperforming analysts’ expectations is a testament to its strong financials. The stock has been a long-term winner, up 100% in the last three years and 400% in the last five years. In both cases, those gains beat the S&P 500 by a wide margin.
Adobe’s Product Offerings
While Adobe is widely known for its software offerings, especially its Acrobat Pro software for creating, editing, and sending PDF documents, there is much more to ADBE than just its popular PDFs. Adobe Systems has three business segments: Digital Media, Digital Experience, and Publishing. Applications like Photoshop, Illustrator, Premiere Pro, and After Effects are all part of the company’s product offerings.
VantagePoint Analysis
The VantagePoint software provides a unique perspective on Adobe’s stock performance. The patented and proprietary intermarket analysis used by the software examines the correlations between different asset classes to identify key drivers of price action. By analyzing these relationships, traders can gain insights into market trends and make more informed trading decisions.
In this analysis, we will examine the VantagePoint forecast for Adobe’s stock performance, including its daily range forecast and neural network indicator. We will also discuss fine-tuning entries and exits using the Price Range prediction forecast and provide a trading suggestion for Adobe’s stock.
VantagePoint Forecast
The VantagePoint software has been very accurate in predicting Adobe’s stock performance. The A.I. forecast indicates that the trend is clearly UP, with prices expected to rise in the near future. Power Traders who are in at lower prices have moved their protective sell stops up to the bottom of the trading channel as a defensive measure.
Trading Suggestion
Our analysis suggests that Adobe’s stock is a good swing trading candidate. With the consensus of analysts’ opinions showing that ADBE is fairly valued around $634, we think it is a good opportunity to purchase sharp pullbacks in the price action and sell when the A.I. determines the stock is overvalued.
Aggressive Option Traders
For aggressive option traders who are experienced with selling put options, there may be opportunities to explore selling AT THE MONEY puts as volatility increases in this stock.
Disclaimer
It’s essential to note that trading involves a high degree of risk, and it’s not prudent or advisable to make trading decisions that are beyond your financial means or involve trading capital that you’re not willing and capable of losing. VantagePoint’s marketing campaigns do not constitute trading advice or an endorsement or recommendation by VantagePoint AI or any associated affiliates of any trading methods, programs, systems, or routines.
By following the A.I. trend analysis and practicing good money management on all trades, we anticipate that Adobe will break to new 52-week highs, confirming its value as a long-term investment opportunity.