Jefferies Initates Coverage On Adobe Systems

Jefferies released an industry note Thursday on software and initiated coverage on Adobe Systems Incorporated ADBE with a Buy rating and $83 price target.

Analysts led by John DiFucci commented that they “seek to invest in companies with a compelling combination of growth and operational discipline, and where a company may be under-monetizing or over-investing relative to its potential.

“We look for other structural advantages, and ultimately consider the future FCF potential, and through the lens of switching costs and resulting pricing power. We also pay particular attention to the business model and ability to scale, and create financial leverage.”

For Adobe, the analysts “see value beyond the Creative Cloud transformation that appears to be well understood by investors at this point. Our thesis is rooted in the dominance of Adobe's creative tools and extends to include Adobe's unique advantage in digital marketing, as well as the virtuous relationship between these two businesses.”

Adobe Systems closed at $70.44 Thursday, down 0.54 percent.