ADBE At Price Support Zone, Right Time To Buy?
Adobe (ADBE) should be on your watchlist. Here is why – it is currently trading in the support zone ($326.53 – $360.91), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 7 times and subsequently went on to generate 38.2% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 3/13/2020 | 1.6% | 32 |
| 4/14/2020 | 102.0% | 584 |
| 6/17/2022 | 25.0% | 59 |
| 11/23/2022 | 16.8% | 71 |
| 3/16/2023 | 9.1% | 15 |
| 5/12/2023 | 89.2% | 266 |
| 4/8/2025 | 23.7% | 41 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For ADBE Read Buy or Sell ADBE Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 10.7% LTM and 10.5% last 3 year average.
- Cash Generation: Nearly 41.4% free cash flow margin and 36.2% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ADBE was 9.9%.
- Valuation: ADBE trades at a PE multiple of 20.9
- Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and better margins
Adobe provides diversified software solutions worldwide, including Creative Cloud subscription, serving enterprise customers through Digital Media, Digital Experience, and Publishing & Advertising segments.
| ADBE | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Application Software | – |
| PE Ratio | 20.9 | 23.9 |
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| LTM* Revenue Growth | 10.7% | 5.2% |
| 3Y Average Annual Revenue Growth | 10.5% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 9.9% | -0.1% |
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| LTM* Operating Margin | 36.2% | 18.6% |
| 3Y Average Operating Margin | 35.4% | 17.8% |
| LTM* Free Cash Flow Margin | 41.4% | 13.3% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
That said, Adobe has seen some serious drops in tough times. It fell about 72.5% during the Dot-Com crash and 67% in the Global Financial Crisis. During the 2022 inflation shock, the dip was around 60%. Even the less severe pullbacks, like in 2018 and the Covid pandemic, still wiped out about 25% of its value. So, despite all the good stuff going for it, Adobe isn’t immune when markets turn sour.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ADBE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.