Figma a ‘nice to have,’ but not central to Adobe thesis, says Wolfe Research

After the Competition and Markets Authority of the U.K. provided its provisional findings and possible remedies in its evaluation of Adobe’s proposed acquisition of Figma and found that the anticipated merger would result in a substantial lessening of competition in the global market for all-in-one product design software for professional users and in vector and raster editing software markets, Wolfe Research analyst Alex Zukin called the CMA’s provisional findings and possible remedies “an incremental negative to the deal closing.” An adequate divestiture from Adobe or Figma in overlapping operations seems challenging, says the analyst, who continues to view the Figma acquisition as a “nice to have,” but does not view the deal’s approval as core to the firm’s thesis. Wolfe, which would expect a large buyback if the deal does not close, reiterates an Outperform rating and $650 price target on Adobe shares.