Citi Sees Overreaction To Adobe Systems (ADBE) Apple (AAPL) Spat
May 18, 2010 12:20 PM
Citi Investment Research & Analysis analyst Walter H Pritchard maintained his Buy rating for shares of Adobe Systems Incorporated (Nasdaq: ADBE), with a price target of $42 per share.
Pritchard said that the controversy started by Apple Inc. (Nasdaq: AAPL) about Flash has caused an 8% to 30% discount in Adobe Systems Incorporated shares.
The Citi Investment Research & Analysis analyst wrote, "the stock trades at 17x forward 12-month EPS, which is a 30% premium to S&P500. This compares to a 60-120% premium during past CS product cycles. Estimate revisions usually take over at this stage in the product cycle and we believe bias to numbers is significantly positive (see our CS5 cycle scenarios on page 25). However after examining the Flash controversy and concluding that catalysts are biased to the positive side, we also expect less controversy in coming months and ADBE’s multiple to benefit as a result."
