Market Overview

KeyBanc Raises Price Target On Adobe By 20%, Cites Cloud, AI

Share:
KeyBanc Raises Price Target On Adobe By 20%, Cites Cloud, AI
Related ADBE
After Basking In The Glow Of Netflix Results And Tuesday Rally, Pressure Seems Possible
48 Biggest Movers From Yesterday
SAP To Acquire Qualtrics For $8 Billion In All Cash Deal (Seeking Alpha)

Adobe Systems Incorporated (NASDAQ: ADBE) has proven itself to be a leader in the cloud software market, but some analysts are even more optimistic about the future.

The Analyst

KeyBanc Capital Markets' Brent Bracelin maintains an Overweight rating on Adobe's stock with a price target boosted from $178 to $216.

The Thesis

Adobe is uniquely positioned to continue delivering a 20 percent growth rate and expanding margins over time due to its expanding portfolio of Creative Cloud products, which account for 60 percent of the company's total revenue, Bracelin said in a research report. (See Bracelin's track record here.)

"This segment not only represents the largest moat for Adobe, but also represents its most profitable product category where it faces few competitive threats," Bracelin said.

But the company's focus on increasing the sales mix towards high-margin Digital Media subscription has resulted in consistent margin expansion and the momentum will likely continue into 2018.

Adobe's artificial intelligence unit represents an "underappreciated lever" in 2018 and beyond, the analyst said. The company's recent advances in Sensei will help sustain its high growth rate profile and represents a monetization opportunity, Bracelin said — as incorporated AI technology in existing products would be justified based on higher levels of automation and time savings for end users.

Adobe's stock should be considered "one of the core cloud software platforms to own for 2017 and 2018," the analyst said. 

Price Action

Shares of Adobe have gained nearly 80 percent since the start of 2017.

Related Links:

Adobe Likely Has More Earnings Upside In Its Future

Adobe Remains A Top Large-Cap Pick With Analysts

Adobe CEO Shantanu Narayen unveils the Adobe Experience Cloud at Adobe Summit 2017 on March 21, 2017 in Las Vegas. Courtesy photo. 

Latest Ratings for ADBE

DateFirmActionFromTo
Oct 2018WedbushInitiates Coverage OnNeutral
Oct 2018BarclaysMaintainsOverweightOverweight
Sep 2018ArgusMaintainsBuyBuy

View More Analyst Ratings for ADBE
View the Latest Analyst Ratings

Posted-In: artificial intelligence Brent Bracelin cloudAnalyst Color Price Target Reiteration Analyst Ratings Tech Best of Benzinga

 

Related Articles (ADBE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
JBLGoldman SachsUpgrades0.0
IMOBarclaysUpgrades0.0
JRVRKeefe Bruyette & WoodsDowngrades40.0
ADMPB. Riley FBRDowngrades2.5
EAFVertical GroupDowngrades9.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

GBP/USD Forecast: Move Beyond 1.3300 Handle Seems A Distinct Possibility

EUR/USD Forecast: Bears Eyeing A Break Below 1.17 Handle, FOMC Minutes In Focus