Adobe stock forecast: can it keep going up?

Adobe has been doing well over the last 18 months, but can its success continue?

In this forecast

Adobe is a company that has done well over the course of the COVID-19 pandemic.

Known the world over for its creative software such as Photoshop, InDesign and Premiere Pro, Adobe achieved revenue of $3.84bn (£2.78bn, €3.24bn) in the second quarter of 2021 – 23% higher than the same period in 2020.

Cash flows from its operations reached a record $1.99bn, according to Adobe’s Q2 earnings report.

There’s little doubt that the Adobe stock forecast has continued to be buoyed by the increase in people working from home because of COVID-19 restrictions.

And of course, new methods of collaboration have also had to emerge. Adobe’s infrastructure, which allows files to be shared digitally and securely, has really come into its own during the pandemic.

Continued success

However, while some people had expected consolidation or even a slight retreat following such a successful period, the Q2 results, released on 17 June 2021, are incredibly positive.

Adjusted earnings per share came in at $2.32 on a GAAP (generally accepted accounting principles) basis, compared with $2.27 in Q2 2020.

One of the star performers for Adobe was its subscription revenue, which stood at $3.52bn (gross) for the quarter, up 24% year on year.

The company’s Digital Media segment revenue was $2.79bn, up 25% on the same period, while Creative revenue grew by 24% to $2.32bn and Document Cloud revenue went up 30% year on year to $469m.

John Murphy, Adobe’s executive vice-president and CFO, said:

“Adobe delivered strong digital media annualised recurring revenue and digital experience bookings, as well as record cash flows from operations in Q2. The large market opportunity and momentum we are seeing across our creative, document and customer experience management businesses position us well to deliver another record year.”

To see why the company has been doing well, and how it leads to a positive Adobe stock price forecast we can look at how the company is continuing to unveil a range of new products – all with a view to drumming up additional sales from an exceedingly loyal base of users.

Adobe’s new software

As Adobe share price forecasts reflect, the tech giant is making a concerted push to take its software to the platforms that are most used by creative types. In October 2020, a new version of Adobe Illustrator was launched for the iPad, a reflection of how Apple is rolling out increasingly powerful tablets that are designed to replace laptops.

Adobe has also been embarking on something of an acquisition spree to ensure it can furnish users with the tools that make working from home that little bit easier.

Back in December 2020, the company finalised its purchase of Workfront in a deal that was worth $1.5bn. Workfront has more than a million users and shares approximately 1,000 customers in common with its new owner. It already offers “seamless connections” to Adobe’s Creative Cloud and Experience Cloud through the use of APIs.

Another factor in the Adobe stock price forecast is how the company is continuing to repurchase its stock from the open market. An $8bn programme to buy back common stock was set to conclude in the first half of 2021; already, the tech giant has confirmed that an additional $15bn of ABDE stock will be repurchased between now and 2024.

Thanks to its healthy cash flow, the company definitely has the means to complete such an ambitious initiative.

Generally, this could be regarded as a good thing for the Adobe stock forecast. Buybacks tend to result in a boost to the share prices of companies that pursue them. It reduces the supply of stock that’s in public circulation, meaning there’s less to go around when demand is high.

Of course, do remember that this can end up skewing earnings per share, meaning that a comparison with previous years might not be completely accurate.

Adobe price history and future predictions

As far as the Adobe share price goes, the past 18 months or so have been encouraging. ADBE began 2020 at $334 and, over the following 12 months, it leapt by an impressive 50%. Indeed, as of 30 December, the stock was close to trading at 52-week highs.

This year has seen a consolidation of the price. It stood at $485.34 on 4 January 2021 and while it hovered around this level for a while, it went up past $500 on 16 February. Although there was a dip in the Adobe stock price in early March, going down to $421.20 on 8 March, it soon rallied again, hitting $525.08 on 16 April.

ADBE price history

Date Close Change Change(%) Open High Low
Nov 26, 2021 657.77 1.63 0.25% 656.14 683.45 654.57
Nov 25, 2021 668.02 0.25 0.04% 667.77 668.27 667.77
Nov 24, 2021 667.77 4.59 0.69% 663.18 668.60 646.68
Nov 23, 2021 663.18 -10.59 -1.57% 673.77 674.77 648.32
Nov 22, 2021 673.77 -16.49 -2.39% 690.26 699.17 671.77
Nov 19, 2021 688.13 19.19 2.87% 668.94 699.18 665.77
Nov 18, 2021 669.77 -1.22 -0.18% 670.99 676.20 664.82
Nov 17, 2021 670.77 1.76 0.26% 669.01 672.50 662.77
Nov 16, 2021 670.38 12.08 1.84% 658.30 673.46 655.48
Nov 15, 2021 658.30 0.84 0.13% 657.46 663.41 654.94
Nov 12, 2021 657.76 14.46 2.25% 643.30 658.17 639.78
Nov 11, 2021 643.30 -4.10 -0.63% 647.40 653.43 641.26
Nov 10, 2021 645.82 -19.19 -2.89% 665.01 665.27 644.86
Nov 9, 2021 664.57 0.74 0.11% 663.83 668.95 662.43
Nov 8, 2021 665.62 0.85 0.13% 664.77 667.83 661.12
Nov 5, 2021 662.02 -14.13 -2.09% 676.15 676.83 660.77
Nov 4, 2021 673.85 16.89 2.57% 656.96 675.73 656.77
Nov 3, 2021 654.81 12.02 1.87% 642.79 656.22 639.01
Nov 2, 2021 640.16 0.39 0.06% 639.77 647.33 635.79
Nov 1, 2021 639.87 -10.39 -1.60% 650.26 653.39 634.28

While it went down again to $472.09 on 12 May, it soon went back up, breaking back through the $500 barrier on 26 May and reached $556.95 on 14 June. On 18 July, Adobe opened at $569.96, up more than 3% from $551.36 the night before.

Looking ahead, the Adobe stock forecast for 2021 and beyond seems to be pretty optimistic.

A total of 23 analysts polled by CNN gave a median 12-month forecast price of $600, up 5% on its current price. The most optimistic prediction was $665, a rise of more than 16.67% from current levels.

However, there was a note of caution struck by the lowest prediction of $550, which would see a drop of more than 3.5%. Out of 27 investment analysts polled by CNN, the overwhelming majority, 20, suggested the stock was a buy. A further two said the stock would outperform expectations, and another five recommended holding the stock.

FAQs

At the moment, it probably is. The forecasts are mainly optimistic, and there don’t really seem to be any analysts saying the stock will underperform, let alone giving a sell recommendation. However, predictions are not always accurate, and you should do your own research before buying Adobe.

It might be, slightly. According to Gurufocus, the stock should be worth $458.52, which is quite a bit less than its current price. However, it is worth noting that the overall consensus on the future of Adobe is that its price will continue to rise, so it might not become an issue in the short term. You should remember, though, that the price of stocks and shares can go down as well as up.

The consensus appears to be that it should do. Most predictions suggest a rise of some kind over the next year at the very least. However, things can happen which analysts don’t take into account, so there is no guarantee. Remember not to invest more money than you can afford to lose.

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Trade Adobe Systems Inc - ADBE shares price

Adobe Systems Inc
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657.77
Low: 655.33
High: 680.2

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