Nearly 16% of the $36 Trefis price estimate for Adobe’s (NASDAQ:ADBE) stock is based on the value of Adobe’s Acrobat Family of productivity and collaboration software such as Buzzword (word processing), Acrobat Writer (PDF creator) and Connect Pro (web conferencing). Adobe’s Acrobat business has historically had gross margins greater than 90% and we estimate that it will have a 92% gross margin in 2010.
Furthermore, we forecast that gross margins will decline to just under 90% by the end of our forecast period.
Although gross margins for software products are often high (>70%), some businesses, like Adobe’s LiveCycle software business, have margins closer to 70-80% rather than the 90% margins on Adobe’s Acrobat product.
You can modify our forecast above to see how the Trefis price estimate for Adobe’s stock would be impacted if Adobe’s Acrobat gross margins were to decrease to 80%.
For additional analysis and forecasts, here is our complete model for Adobe.
