Adobe (ADBE)
Down 23% year to date, Adobe stock has seen heavy declines over the past year mostly thanks to the threat of generative AI and industry headwinds. That said, Adobe has been steadily increasing its earnings and revenue and continues to beat earnings expectations (having beat all 4 of their last calls). In fact it’s been doing so well in terms of internal metrics that analysts are actually expecting them to hit an EPS of $20.22 in the next 12 months, representing an 18% increase over that time.
| ADBE | |
| Share Price | $255.94 |
| Earnings Per Share | $17.15 |
| EPS (Analyst Forward 1yr) | $20.22 |
| Price to Earnings | 14.9 |
| EPS Growth (Projected 1 yr) | 17.9% |
| PEG | 0.8 |
At a current PE ratio of 15, this gives ADBE stock a PEG ratio of just 0.8 right now which is really quite good in this current market. Insiders have been selling off the stock over the past year which is a bearish signal, but given the low PEG we are willing to bet that is the reason why they have announced recent stock buybacks.
Adobe is currently investing heavily in AI tools, and it will need to continue to do so if it is to thwart the threats posed from the upcoming barrage of AI image generation tools. At the same time, they have been doing an impressive job adding subscribers to its creative cloud platform; something they may be able to further monetize using their new AI tools. For these reasons, we think it’s too early to tell if Adobe is going to net benefit or net negative thanks to AI technology – so we put ADBE as medium risk, medium reward. However, if we had to wager; we would say it’s more likely to gain thanks to it’s strong underlying earnings and revenue performance and so we have rated it a Strong Buy with an 18% one year forecast. Analysts on average have put Adobe stock as a Hold with a +32% one year upside.
Topics: ADBE stock review, Adobe stock analysis and price prediction
