ADBE
Adobe Inc.$255.86
Buy
Target $593.88
Report: Mar 09, 2026Technology • Software - Infrastructure • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$255.86+132.1%
Rec: BuyConviction: High
Entry Target
$255.86
(0% above current)
Fair Value
$593.88
(132% above current)
Stop Loss
$244.28
(5% below current)
Position Size
Full
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$422.95
52 Week Low$233.16
Avg. 3 Month Volume5.80M
Efficiency
LTM Gross Margin89.4%
LTM EBITDA Margin40.9%
LTM EBIT Margin37.8%
LTM Operating Margin36.6%
LTM ROA24.8%
LTM ROE62.3%
LTM ROIC134.5%
LTM ROCE47.6%
Capital Structure
Market Cap (MM)$98.2B
Enterprise Value (MM)$98.5B
Shares Outstanding410.00M
Total Debt (MM)$6.66B
Cash & Equivalents (MM)$6.33B
LTM Net Debt (MM)$324.00M
LTM Net Debt/EBITDA0.0x
Growth
TTM Rev. Growth11.0%
Last 3-Yr Rev. CAGR10.8%
Last 3-Yr EBITDA CAGR12.1%
Last 3-Yr EPS CAGR19.1%
Valuation
Street Target Price$349.65
LTM EV/Revenue4.0x
LTM EV/Gross Profit4.5x
LTM EV/EBIT10.7x
LTM EV/EBITDA9.8x
LTM P/E13.6x
LTM EV/FCF9.6x
LTM P/FCF9.5x
LTM P/TB6.0x
LTM P/B8.6x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $255.86 versus fair value $593.88 (132.1% expected return), and valuation confidence is stable. Debate: Bull case depends on Semrush $1.9B acquisition closes Q2 FY2026, extending Firefly into agentic web for marketers and validating AI moat with accretive ARR. Bear case centers on AI disruption from Canva/OpenAI commoditizes creativity, reducing Creative Cloud seats and ARR growth below 7%. Conclusion: Recommendation is Buy with Full sizing and Long-Term horizon.
Bull Case
Adobe's moat widens via Firefly's commercially safe AI (tripled ARR) and 850M MAU (+17% YoY), sustaining 36.6% margins (530bps above 5Y avg) and 123% ROIC; $25B buyback authorization with $3.89B remaining supports EPS CAGR 8.2%. Subscription hit rates 83%/100% quarterly validate execution.
Bear Case
AI commoditization from Canva/OpenAI risks seat erosion (stock photo revenue down faster than guided); FTC/DOJ lawsuit on cancellation fees and negative tangible book -$1.73B signal risks; stock -17.7% vs S&P +68.8% over 3Y reflects skepticism.
Key Catalysts
Near-Term (0-6 months)Impact: High
Semrush $1.9B acquisition closes Q2 FY2026, extending Firefly into agentic web for marketers and validating AI moat with accretive ARR. Addr...
Mid-Term (6-18 months)Impact: Critical
AI-first ARR exceeds 10% of total (tripled YoY already), shifting to consumption pricing and reaccelerating growth beyond 10.5% baseline. Co...
Long-Term (18+ months)Impact: Moderate
Adobe trades at 42% discount to 5Y EV/Sales avg (4.7x vs 10.2x) amid AI fears, with Q1 FY2026 ARR +10.9% and institutional net buys +5.88M s...
Primary Risks
Concern: Medium
AI disruption from Canva/OpenAI commoditizes creativity, reducing Creative Cloud seats and ARR growth below 7%.
Concern: Low
FTC/DOJ lawsuit on cancellation fees escalates to material fines or forced changes eroding pricing power.
Concern: Medium
Stewardship is strong with 91% independent board including CFO experts (Oberg ex-Marriott, Neumann Netflix); $34.1B buybacks align interests...
Recent Activity
2026-02-03Analyst Target
-7.31%Firm: Piper Sandler Price Target: $330.00 Price When Posted: $293.38 Implied Upside: +12.5%
2025-12-05Analyst Target
+5.33%Firm: Barclays Analyst: Saket Kalia Price Target: $415.00 Price When Posted: $328.73 Implied Upside: +26.2%
2025-10-29Analyst Target
-6.13%Firm: BMO Capital Analyst: Keith Bachmann Price Target: $405.00 Price When Posted: $341.89 Implied Upside: +18.5%
2025-06-13SEC Filing (8-K)
-5.32%Adobe reports record Q2 FY2025 revenue of $5.87 billion with 11% year-over-year growth
2025-03-13SEC Filing (8-K)
-13.85%Adobe delivers record Q1 FY2025 results with $5.71 billion revenue
Valuation Table
9.8/10Decision Grade
Scenario Range
$324
Bear
$472
Base
$614
Bull
$256