ADBE
Adobe Systems Incorporated
TMT
05/01/2014
Presented
| Date | 04/28/2014 |
| Price | $60.40 |
| Market Cap | $30.10B |
| Ent Value | $28.44B |
| P/E Ratio | 146.32x |
| Book Value | $13.62 |
| Div Yield | N/A |
| Shares O/S | 497.73M |
| Ave Daily Vol | 4,290,000 |
| Short Int | 0.96% |
Current
| Price | $508.03 |
| Market Cap | $223.63B |
| Adobe Systems Incorporated operates as a diversified software company worldwide. It operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. The Digital Media segment provides tools and solutions that enable individuals, small businesses, and enterprises to create, publish, promote, and monetize their digital content anywhere. This segment’s flagship product is Adobe Creative Cloud, a subscription service that allows customers to download and install the latest version of its creative products. This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers. The Digital Marketing segment provides solutions and services for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment also offers analytics, social, targeting, media optimization, Web experience management, and cross-channel campaign management solutions to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. The Print and Publishing segment provides products and services that address diverse market opportunities, including eLearning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses. The company distributes its products through a network of distributors, value-added resellers, systems integrators, independent software vendors, retailers, and OEMs. It also markets and licenses its products and services directly to enterprise customers through its sales force, to end-users through app stores, and through its Website at adobe.com. Adobe Systems Incorporated was founded in 1982 and is headquartered in San Jose, California.a |
Highlights
Adobe (ADBE) “might be hard to digest as a value play, but in this tape [I think} it qualifies,” said the presenter. Investors don’t appear to be interested in software, unless it’s Microsoft or IBM, he added. ADBE’s two main segments are their Creative Cloud and the Marketing Cloud, and the meat of the story – and reason he is long shares at present - relates to the math around the license revenue transition. This business model shift has been a big theme in the market, and ADBE is the clear leader (Autodesk and Intuit are among those following in its footsteps). The company is four quarters into what should ultimately be an eight quarter transition, so 2016 is the “right number” to look at valuation wise and ADBE is trading at just 12x the presenter’s base case for earnings. Potential near-term catalysts could come in the form of Marketing Cloud business wins, as the presenter’s research suggests the trends to digital marketing/ advertising puts ADBE’s suite of products in greater demand.
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