Adobe Stock Price Forecast: Buy More ADBE Shares, Price Could Again Reach $380

motek 1The ADBE Stock Price Forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • I correctly predicted last February that Adobe’s stock deserved a 30-day price target of $380.
  • I’m again endorsing ADBE as a buy because the stock is a bargain buy whenever it trades below $330.
  • The pandemic quarantines around the world is not a debilitating headwind for a SaaS company like Adobe.
  • The pricey subscription of the CorelDraw 2020 Graphics Suite is a small but important tailwind for Creative Cloud.
  • Adobe is aggressively monetizing on the iPad. The Photoshop for iPad is now bundled with Fresco for $10/month.

My latest recommendation is for investors to take their profits on Tesla (TSLA) and Advanced Micro Devices (AMD). Selling these dangerously overpriced stocks will allow you to buy more shares of Adobe (ADBE). I correctly predicted last February 13 that ADBE deserved a month-long price target of $380. I am again betting that ADBE will once again breach $380 within the next 90 days. Like it or not, I insist that ADBE is a bargain whenever it trades below $330.

(Source: Seeking Alpha)

If it were not for the pandemic panic sell-off in March, ADBE would still be trading above $360. It is a shame that many investors are still not back to their full senses. They haven’t realized that SaaS (Software-as-a-Service) firms like Adobe are not handicapped by pandemics. On the contrary, work-from-home solutions by many companies at the moment are actually good for Adobe.

Why ADBE Stock Price Forecast Deserves Higher Valuation

Pandemics are bad for hardware vendors like Tesla and AMD but never for software firms. ADBE is obviously the better growth investment to own. Unfortunately, investors still put a higher valuation for TSLA and AMD. Exploit this market aberration, sell TSLA, and AMD. After this, use the money to buy more ADBE.

It is illogical that AMD has higher TTM and forward P/E ratios than ADBE. ADBE is the better growth stock to own. It touts higher 3 and 5-year revenue growth than AMD. It should be Adobe’s stock that must be given a 50x forward P/E appreciation.

 (Source: Seeking Alpha)

Going forward, Adobe will keep its monopoly on graphic software products. This is something that Tesla cannot boast. Every car company in the world is capable of producing great electric vehicles. American, European, Japanese car brands are now working hard to come up with great alternatives to Tesla cars.

On the other hand, many have tried to disrupt Adobe’s decades-long dominance in graphic/design software. All of them failed. Not even Microsoft or Autodesk (ADSK) is willing to challenge Adobe again. The only remaining rival of Adobe is Corel. KKR bought Corel Corporation last July and infused it with cash. KKR certainly has the financial resources and influence to challenge Adobe’s Creative Cloud. However, KKR is a greenhorn when it comes to pricing Corel products.

It is a tailwind for Adobe that the new CorelDRAW 2020 Graphics Suite (composed of 7 programs) is asking $399/year. This is bad pricing considering Adobe Creative Cloud only charges $600/year for all of its 21 apps (much more when you add the free mobile apps). Most small and large companies (and even freelancers) will remain ever loyal to Adobe because KKR made Corel products more expensive. Going forward, KKR’s takeover of Corel could even force die-hard fans of CorelDRAW to switch to Adobe Illustrator CC.

(Source: corel.com)

Further, Adobe is now also monetizing aggressively on the iPad platform. Adobe wants customers to pay $10 per month for Photoshop for iPad + Adobe Fresco (digital painting app) bundle. This will likely be the same pricing for the upcoming Illustrator for iPad. Adobe is now catering to iPad-only creative professionals. It is for the benefit of ADBE shareholders that Adobe will no longer offer free iPad versions of its important apps for those already subscribed to the PC/Mac platforms.

If people can afford to pay $1,000 for iPads, they won’t mind paying $10/month for Photoshop for the iPad.

Pandemic Is Not A Headwind For Adobe

You should buy more ADBE while there is a pandemic.  Adobe reaps long-term benefits whenever companies are forced to rent more software. The COVID 19 pandemic is boosting Adobe’s growth as a SaaS leader. Adobe is a long-time enterprise SaaS leader

The new normal of work-from-home will help Adobe surpass its 29% annual growth rate in enterprise SaaS. It is highly feasible that Adobe will probably unseat Salesforce as the no. 2 enterprise SaaS player. Adobe offers more diverse subscription software products than Salesforce.

Like it or not, advertisers and marketers will keep paying their subscriptions to Adobe’s Creative Cloud, Marketing Cloud, and Experience Cloud. More so now that most designers/content creators are still working from home. I do not think Adobe will allow enterprise subscriptions to be used on home computers of individuals. This will only be permitted if employees bring home their office computers (where corporate licensed Adobe software already installed) to their residences.  The issue of data security means corporate IT administrators will be choosy on who could bring home office computers.

The only safe solution I see is for companies to pay for individual Adobe subscriptions (on a per-month basis) for their work-from-home employees. New subscriptions from existing corporate customers are always good for Adobe.

Conclusion

Adobe is a safe long-term investment. It deserves its current high valuation ratios (when compared to other software vendors). The continuing dominance of Adobe in the print/web/mobile design software market is an impregnable moat. The only thing that Adobe lacks now is dedicated to 2D/3D CAD (computer-aided design) products. My fearless forecast is that once Creative Cloud reaches peak subscriber count, Adobe will eventually come up with subscription products that will rival Autodesk’s AutoCAD, Revit, 3DS Max, and Maya.

Adobe’s market cap is now over $150 billion. It can easily digest a stock+cash purchase of Dassault    Systemes (DASTY). DASTY’s market cap is less than $38 billion. This is just wishful thinking but it might turn out to be true 3 to 5 years from now. Due to the limited number of creative professionals, Creative Cloud will soon peak. The only growth avenue for Adobe will be to challenge AutoCAD.

My buy recommendation for Adobe is again partly because of its super-bullish one-year market trend forecast score from I Know First. More importantly, I Know First has a very high predictability score of 0.73 when it comes to its one-year predictions for ADBE. We should trust the quantitative analysis of I Know First. Go long on ADBE now and you will most likely sell it for a higher price after 12 months.

Past I Know First Success with ADBE Stock Price Forecast

I Know First has been bullish on ADBE stock price forecast in past predictions. The I Know First algorithm issued a bullish outlook on October 10, 2019. The algorithm successfully forecasted the movement of Adobe’s shares and has risen by 17.48% until this week. See the chart below.

This image has an empty alt attribute; its file name is adbe1.png

This bullish Adobe stock price forecast was sent to the current I Know First subscribers on October 10, 2019.

Here at I Know First, our AI-based algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily stock predictions, as well as a gold price forecast, currency predictions, Tesla stock predictions, and, in particular, Apple stock predictions. Today, we are producing daily stock algorithm forecasts for over 10,500 assets. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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Please note-for trading decisions use the most recent forecast