Adobe Systems is a diversified software company worldwide. It operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. The Company offers products and services for professionals, marketers, application developers, enterprises and consumers for creating, managing, delivering, optimizing and engaging with content. The company was founded in 1982 and is based in San Jose, California.
ADBE Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for ADBE, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Adobe Inc ranked in the 33th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 39.5%. The most interesting components of our discounted cash flow analysis for Adobe Inc ended up being:
The company has produced more trailing twelve month cash flow than 92.55% of its sector Technology.
The business' balance sheet suggests that 2% of the company's capital is sourced from debt; this is greater than just 7.96% of the free cash flow producing stocks we're observing.
ADBE's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 49.77% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as ADBE, try AMOT, DBX, ACN, OMCL, and TDY.
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Michael Fitzsimmons on Seeking Alpha | September 27, 2020
Adobe's (ADBE) latest quarter was no surprise – yet another beat and raise on strength in Digital Media, which offset the lagging Digital Experience segment. On balance, Digital Media remains the key to the ADBE story. As a best in class software asset capable of delivering sustainable, double-digit recurring revenue...
Aaron Butler on Seeking Alpha | September 23, 2020