Entering text into the input field will update the search result below

Adobe Stock: Here's Why It Is Undervalued Despite High Valuation Multiples

Feb. 15, 2021 3:50 AM ETAdobe Inc. (ADBE)31 Comments
StockBros Research profile picture
StockBros Research


  • Adobe is an industry leader with a wide moat.
  • The company has seen impressive growth in the past and will likely continue to do so going forward.
  • We estimate Adobe to have an intrinsic value of $530 per share with current market conditions.

Adobe Inc. (NASDAQ:ADBE) is a multi-headed beast with a wide range of products. Some products such as Magento, used for web building, lag way behind the leaders. But for other products such as Photoshop, it is the behemoth of the industry. The company has clear and measurable competitive advantages that have made it a great investment in the past. We believe that these factors will continue to make it a great investment going forward.

Industry Analysis and Positioning

Adobe has estimated that it will have a total addressable market (TAM) of $147B by 2023, up from an estimated TAM of $118B in 2022. This definitely fits the bill for a fast-growing industry. The company further breaks down the TAM into 3 segments: Creative Cloud, Document Cloud, and Experience Cloud.

The Creative Cloud segment is what contains its most recognized software, such as Photoshop. It's hard to argue a company is not a leader when one of its products becomes popular enough to be used as a verb: "Do you like this picture I Photoshopped?". Although Photoshop is its most widely known product by far, it's not the only one that many businesses rely on. Others such as Illustrator, InDesign CC, and Premiere Pro are also considered as industry standards.

Creative software is difficult to learn. Most of Adobe's products and its competitors' products have their own learning curves which take a lot of time even if they are similar. Given this hurdle, once users become familiar with all the features and are able to perform tasks efficiently, they feel discouraged at the thought of starting all over again with a new platform.

This is especially true for larger companies who are working on a lot of projects with urgent deadlines and have employees already trained in Adobe's products. The costs of

This article was written by

StockBros Research profile picture
Two bros that talk about stocks, mainly GARP (growth at a reasonable price) stocks, but we look for opportunities everywhere. We don't have a specified time horizon. We invest in a stock for as long as our thesis holds true, and get out when the facts change. In addition, we've developed market-beating algorithms with python that help us find attractive investment opportunities within our own portfolios.Website: www.stockbrosresearch.comTwitter: @StockBrosTrades

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ADBE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.