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Adobe: Should We Worry about the Falling Stock Price?
Stock Analysis & Ideas

Adobe: Should We Worry about the Falling Stock Price?

Adobe (NASDAQ:ADBE) is a software firm that has had a great start to the year.

The company’s cloud solutions, such as Creative Cloud, Document Cloud, and Adobe Experience Cloud, have seen strong demand, and it has continued to innovate to stay ahead of the pack in this digital race.

However, the tide has changed its course since the company revealed its fiscal fourth-quarter results on December 16.

Why Is the Stock Falling?

There isn’t much digging to be done here; the explanation for the decline is apparent and simple: dismal guidance for the first quarter and full-year 2022 projection.

Despite the fact that Adobe had a good fiscal fourth quarter, investors were disappointed by the company’s lackluster outlook. The business expects net sales of $17.9 billion and adjusted earnings of $13.70 billion in fiscal 2022, which is lower than the consensus estimates of $18.16 billion and $14.26 per share.

As a result, the stock dropped 1.7% on Friday, closing at $556.64. Also, while Adobe’s stock has climbed 15% this year, it has underperformed the S&P500 and the Nasdaq 100, which have gained 25% and 24%, respectively.

According to the quarterly results, overall sales increased 20% year-over-year and above analysts’ forecasts of $4.09 billion. Non-GAAP earnings of $3.20 per share increased 13.9% year-over-year.

Also, both divisions, Digital Media and Digital Experience, increased revenue, by 21% and 23%, respectively. As the digital transformation trend continues, these categories will continue to gain traction in 2022.

Website Traffic Details

We utilized TipRanks’ new Website Traffic tool to get a look at Adobe’s online traffic data.

The website traffic figures for the ADBE show a divergence between traffic stats and stock price. The number of unique users visiting Adobe declined 1.1% in November compared to October. However, the stock price grew by 3%, demonstrating that the company’s fundamentals remain robust.

Wall Street’s Take

On TipRanks, Adobe stock commands a Strong Buy consensus rating, based on 17 Buys and 5 Holds. As for price targets, the average ADBE stock price prediction of $685.24 implies almost 23% upside potential from the current levels.

Bottom Line

Adobe’s stock may continue to fall in the coming days, as inflation worries grow and competition heats up in the digital media market intensifies.

Nonetheless, Adobe’s technological leadership, excellent revenue growth trend, robust balance sheet, and, most importantly, accelerated digital growth, might all contribute to the shares trending higher again, possibly making this drop a great buying opportunity for investors.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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