ADBE stock forecast: Another record-breaking year?
ADBE stock forecast: What’s next after a record-breaking 2021?
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 posted a record $4.11bn in revenue in the fourth quarter of 2021, a 20% rise from the same period in 2020. That impressive climax pushed full-year revenue over $15bn.
Cash flows from its operations exceeded $2bn.
There is little doubt that the Adobe stock forecast has continued to be buoyed by the legacy of the work-from-home restrictions enacted because of Covid-19.
And, of course, new methods of collaboration have also been required. Adobe’s infrastructure, which allows files to be shared digitally and securely, has really come into its own during the pandemic.
While some people had expected consolidation or even a slight retreat following such a successful period, the company’s fourth-quarter results, released on 16 December 2021, remain incredibly positive.
Adjusted earnings per share came in at $2.57 on a GAAP (generally accepted accounting principles) basis.
One of the star performers for Adobe was its subscription revenue, which grossed $3.81bn for the quarter, up from $3.12bn in the fourth quarter of 2020.
The company’s Digital Media segment revenue was $3.01bn, up 21% on the same year-ago period, while Creative revenue grew by 19% to $2.48bn and Document Cloud revenue went up 29% year-on-year to $532m.
Dan Durn, Adobe’s executive vice-president and chief financial officer, said:
"Adobe’s financial performance in fiscal 2021 was outstanding, with top-line acceleration resulting in more than $7bn in operating cash flows. With an estimated $205bn addressable market, we are well positioned for significant growth in the years ahead with our industry-leading products and platforms.”
To see why the company has been doing well, and how it feeds into the Adobe stock price forecast, it is important to review the way in which the company is continuing to unveil new products. All with a view to drum up additional sales from an exceedingly loyal base of users.
What is your sentiment on ADBE?
Video boosts the document star
In 2022, Adobe is targeting $17.9bn in revenue and GAAP earnings per share of $10.25. In the first quarter, it hopes to deliver $4.23bn in revenue and $2.63 GAAP earnings per share. The strengthening US dollar means a headwind for revenue growth. Travel and facilities spending is expected to increase throughout the year. The company is also spending on long-term initiatives, integrating Frame.io and increasing its headcount.
The third quarter acquisition of Frame.io, a cloud-based, collaborative platform for video editing, is particularly intriguing. This work has traditionally been a job undertaken in isolation, but Adobe sees an opportunity in a platform that encourages teamwork by bundling it with Photoshop, Premiere Pro and After Effects.
Back in December 2020, the company finalised its purchase of Workfront in a deal 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 (application programming interfaces).
Another factor in the ADBE stock price forecast is how the company is continuing to repurchase its stock from the open market. In December 2020, it was granted a $15bn authority to buy back through to 2024. During 2021, it spent $3.87bn of that to buy 7.2 million shares.
Thanks to its healthy cash flow, the company has the means to complete such an ambitious initiative.
Generally, this could be regarded as a good thing for the Adobe stock forecast. Buy-backs tend to result in a boost to the share prices of companies that pursue them. It reduces the supply of stock that is in public circulation, meaning there is 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 12 months have been mostly encouraging. ADBE ended 2020 at just over $500 and leapt by an impressive 37.6% to its 19 November 2021 record high of around $690. The market, however, was not in a festive mood for the 16 December quarterly report, as the price fell from $630. 33 to $549.77. It slumped again after a brief post-Christmas rally, but remains significantly above its 52-week low of $421.20 on 8 March 2021.
ADBE price history
|Sep 29, 2022||276.39||0.49||0.18%||275.90||279.87||275.30|
|Sep 28, 2022||279.90||5.26||1.92%||274.64||282.60||272.40|
|Sep 27, 2022||276.90||-3.33||-1.19%||280.23||284.41||274.63|
|Sep 26, 2022||277.30||-6.60||-2.32%||283.90||288.66||276.25|
|Sep 23, 2022||284.60||0.57||0.20%||284.03||288.24||280.60|
|Sep 22, 2022||287.89||0.49||0.17%||287.40||289.41||279.95|
|Sep 21, 2022||284.37||-5.54||-1.91%||289.91||297.73||283.40|
|Sep 20, 2022||290.40||-4.55||-1.54%||294.95||294.95||287.67|
|Sep 19, 2022||295.50||-0.40||-0.14%||295.90||298.97||293.20|
|Sep 16, 2022||298.89||-4.49||-1.48%||303.38||303.38||292.00|
|Sep 15, 2022||303.90||-66.97||-18.06%||370.87||373.37||303.72|
|Sep 14, 2022||372.37||2.79||0.75%||369.58||374.10||365.65|
|Sep 13, 2022||368.97||-25.90||-6.56%||394.87||396.56||367.20|
|Sep 12, 2022||396.22||7.86||2.02%||388.36||397.01||386.86|
|Sep 9, 2022||394.16||6.80||1.76%||387.36||395.92||385.92|
|Sep 8, 2022||384.86||11.55||3.09%||373.31||386.86||373.31|
|Sep 7, 2022||378.87||12.00||3.27%||366.87||381.30||366.87|
|Sep 6, 2022||368.18||-1.64||-0.44%||369.82||373.97||365.08|
|Sep 2, 2022||368.89||-1.51||-0.41%||370.40||381.82||365.28|
|Sep 1, 2022||370.27||0.40||0.11%||369.87||371.62||361.57|
Looking ahead, the Adobe stock forecast for 2022 and beyond seems optimistic.
A total of 26 analysts polled by CNN gave a median 12-month forecast price of $656. The most optimistic prediction was $750. The low forecast of $575 was 10% higher than its early February prices.
Of the 31 analysts polled, 20 rated Adobe a buy, six hold and five outperform. None said sell, none rated it underperform.
Is Adobe a good stock to buy?
At the moment, it may be. The forecasts are mainly optimistic, and no analysts in the CNN round-up said the stock will underperform or gave a sell recommendation. Predictions are not always accurate, however, and you should do your own research before buying Adobe.
Is Adobe stock overvalued?
It might be, slightly. Though analyst in the CNN poll believe it has more room to grow in 2022. You should remember that the price of stocks and shares can go down as well as up.
Will Adobe stock continue to go up?
The consensus appears to be that it should. Most predictions suggest a rise of some kind over the next year at the very least. But it is important to note that events can happen that analysts can not factor into their predictions, so there is no guarantee. Remember never to invest more money than you can afford to lose.
How to buy Adobe stock?
You can trade Adobe shares today in tokenised assets at Currency.com. Tokenised assets are crypto derivatives whose value is linked to the value of a particular asset. Currency.com offers the opportunity to buy with leverage, and you can easily define stops and limits to request positions to close at a specified price. Make sure you understand how tokenised assets work before investing.