Is the Adobe Stock Still Overvalued After Their 34% Decrease YTD?

This ADBE analysis sets out to answer the age-old question "Is the ADBE stock a good buy right now?". This analysis uses 2 valuation methods to determine an ADBE Stock Forecast, which can help us to answer the "age-old question". You are probably aware that Adobe Inc. (NASDAQ: ADBE) is a leader in the Software—Infrastructure space. In this analysis, we are going to look at some of the key financial ratios for Adobe to determine a price prediction for ADBE. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my ADBE stock price prediction, then show you the approach and assumptions used to calculate the ADBE stock forecast. Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable ADBE stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful. Adobe Stock Forecast for 2023 is $313.81 Per Share The Adobe Inc. stock price prediction of $313.81 was derived from 2 main valuation methods (which are averaged for the final price target you see above). I'll dive into the approach to show you how I determined how I “predicted” a stock price of $313.81 for ADBE. Adobe Stock Financial Growth Metrics ADBE Comparable Companies Analysis The Financial growth Metrics provide an analytics valuation approach to determining a reasonable ADBE stock forecast. The comparable companies' analysis determines ADBE stock forecast by comparing ADBE's financial ratios to the average financial ratios of a group of similar stocks. Adobe Stock Forecast for 2023 Using PE Ratio and EPS For this part of the analysis, I am looking at the history of key financial metrics for Adobe Inc. to forecast the stock into 2022 and 2025. Most investors know that historical performance does not guarantee future performance, but it is useful to see how ADBE has been trending. Currently, the Adobe stock has a Forward Earnings Per Share estimate of 15.85. Furthermore, it has been estimated that ADBE's Forward Price to Earnings Ratio is 28.41. Since we have both the Forward (2023) EPS and P/E estimates for the ADBEstock, we can determine an Adobe stock forecast for 2023 by multiplying ADBE's P/E and EPS, which yields an estimate of $450.30 per share. There are other ways to predict the price for ADBE but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast ADBE's stock price. ADBE Stock Forecast Using Comparable Analysis Who are Adobe Inc.'s Competitors? In order to undergo a comparable analysis, we need to outline ADBE's main competitors. These competitors need to have; a stock, valid financial ratios, operations similar to ADBE, and a market cap similar to ADBE (if possible). By keeping this in mind, I found the following list of companies to be some of ADBE stocks' closest competitors: AVGO, CSCO, INTC, QCOM, ASML, TXN, INTU, AMD, AMAT, MU Using a Comparable Analysis to Determine an ADBE Price Forecast Price to Book (P/B): ADBE's current P/B ratio is 12.55, compared to the average P/B ratio of ADBE's peers being 5.91. This implies that ADBE is overvalued and their share price should change by a factor of -52.94% to be at fair value (based on ADBE's P/B compared to the P/B of their peers). Price to Equity (P/E): ADBE stock P/E ratio is currently 36.46, compared to the average P/E ratio of ADBE's peers being 17.51. This implies that ADBE is overvalued and their share price should change by a factor of -51.98% to be at fair value (based on ADBE's P/E compared to the P/E of their peers). Overall, ADBE stock is overvalued and needs to experience a change in the stock price of (an average of) -52.46% to be considered “at fair value”. Applying this percentage change to ADBE's current price of $372.96 implies a forecasted price of $177.31 Are the ADBE Analyst Ratings in Agreeance With Our Conclusion? Analyst Ratings have provided a relatively strong indicator of future price movement, which is why they are used to (hopefully) support our ADBE stock forecast. There are a total of 47 analyst ratings for ADBE, which are distributed as follows: 39 Buys 8 Holds 0 Sells Overall, the vast majority of analysts are in agreeance on the fact that the ADBE stock is currently undervalued and has given it a "buy" rating. Furthermore, all of the analysts that "strayed from the pack" have all agreed on the fact that if the Adobe stock is not undervalued, it is at least at/near fair value and thus has given the ADBE stock a "hold" rating. ADBE Stock Forecast and Price Prediction Summary Should you buy ADBE? Well, based on the overall ADBE stock forecast of $313.81 per share, and the current price of ADBE, I would disagree with the analysts and say ADBE is actually a "sell". Let me know what you think, happy to dive into other aspects of ADBE to help you make an informed investment decision.

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Is the Adobe Stock Still Overvalued After Their 34% Decrease YTD?

Jul 14, 2022

bearish

general Analysis

[4 min Read]

blog post cover photo

Photo by: Eftakher Alam

This ADBE analysis sets out to answer the age-old question "Is the ADBE stock a good buy right now?". This analysis uses 2 valuation methods to determine an ADBE Stock Forecast, which can help us to answer the "age-old question".

You are probably aware that Adobe Inc. (NASDAQ: ADBE) is a leader in the Software—Infrastructure space. In this analysis, we are going to look at some of the key financial ratios for Adobe to determine a price prediction for ADBE. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my ADBE stock price prediction, then show you the approach and assumptions used to calculate the ADBE stock forecast.

Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable ADBE stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.

Adobe Stock Forecast for 2023 is $313.81 Per Share

The Adobe Inc. stock price prediction of $313.81 was derived from 2 main valuation methods (which are averaged for the final price target you see above). I'll dive into the approach to show you how I determined how I “predicted” a stock price of $313.81 for ADBE.

  1. Adobe Stock Financial Growth Metrics
  2. ADBE Comparable Companies Analysis

The Financial growth Metrics provide an analytics valuation approach to determining a reasonable ADBE stock forecast. The comparable companies' analysis determines ADBE stock forecast by comparing ADBE's financial ratios to the average financial ratios of a group of similar stocks.

Adobe Stock Forecast for 2023 Using PE Ratio and EPS

For this part of the analysis, I am looking at the history of key financial metrics for Adobe Inc. to forecast the stock into 2022 and 2025. Most investors know that historical performance does not guarantee future performance, but it is useful to see how ADBE has been trending.

Currently, the Adobe stock has a Forward Earnings Per Share estimate of 15.85. Furthermore, it has been estimated that ADBE's Forward Price to Earnings Ratio is 28.41. Since we have both the Forward (2023) EPS and P/E estimates for the ADBEstock, we can determine an Adobe stock forecast for 2023 by multiplying ADBE's P/E and EPS, which yields an estimate of $450.30 per share.

There are other ways to predict the price for ADBE but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast ADBE's stock price.

ADBE Stock Forecast Using Comparable Analysis

Who are Adobe Inc.'s Competitors?

In order to undergo a comparable analysis, we need to outline ADBE's main competitors. These competitors need to have; a stock, valid financial ratios, operations similar to ADBE, and a market cap similar to ADBE (if possible).

By keeping this in mind, I found the following list of companies to be some of ADBE stocks' closest competitors:

AVGO, CSCO, INTC, QCOM, ASML, TXN, INTU, AMD, AMAT, MU

Using a Comparable Analysis to Determine an ADBE Price Forecast

  1. Price to Book (P/B): ADBE's current P/B ratio is 12.55, compared to the average P/B ratio of ADBE's peers being 5.91. This implies that ADBE is overvalued and their share price should change by a factor of -52.94% to be at fair value (based on ADBE's P/B compared to the P/B of their peers).
  2. Price to Equity (P/E): ADBE stock P/E ratio is currently 36.46, compared to the average P/E ratio of ADBE's peers being 17.51. This implies that ADBE is overvalued and their share price should change by a factor of -51.98% to be at fair value (based on ADBE's P/E compared to the P/E of their peers).

Overall, ADBE stock is overvalued and needs to experience a change in the stock price of (an average of) -52.46% to be considered “at fair value”. Applying this percentage change to ADBE's current price of $372.96 implies a forecasted price of $177.31

Are the ADBE Analyst Ratings in Agreeance With Our Conclusion?

Analyst Ratings have provided a relatively strong indicator of future price movement, which is why they are used to (hopefully) support our ADBE stock forecast. There are a total of 47 analyst ratings for ADBE, which are distributed as follows:

39 Buys

8 Holds

0 Sells

Overall, the vast majority of analysts are in agreeance on the fact that the ADBE stock is currently undervalued and has given it a "buy" rating. Furthermore, all of the analysts that "strayed from the pack" have all agreed on the fact that if the Adobe stock is not undervalued, it is at least at/near fair value and thus has given the ADBE stock a "hold" rating.

ADBE Stock Forecast and Price Prediction Summary

Should you buy ADBE? Well, based on the overall ADBE stock forecast of $313.81 per share, and the current price of ADBE, I would disagree with the analysts and say ADBE is actually a "sell". Let me know what you think, happy to dive into other aspects of ADBE to help you make an informed investment decision.

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ADBE

Adobe Inc.

449.41

3.74
0.84%

Return

-20.50%
Change % Since Posting
-76.45
Change Since Posting
372.96
Price When Posted

Metrics

313.81
Target Price
9/ 10
Confidence
6-12 Months
Timeframe
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