Adobe Stock Predicted to Reach $200 Mark
Have a Peek at Adobe's Quarterly Results
In a recent announcement, Adobe (NASDAQ: ADBE) reported its fiscal first-quarter earnings for the period ending February 2025. The results showed earnings of $5.08 per share on revenues of $5.71 billion, marking a 10% year-over-year increase in sales and a 13% growth in earnings. The figures surpassed Wall Street's expectations, which had projected earnings of $4.97 per share on sales of $5.66 billion. Yet, Adobe's stock took a 14% tumble on March 13. This decline could be partly attributed to a less-than-impressive outlook for the current quarter. Adobe projects $4.98 earnings per share on sales of $5.8 billion (at the mid-point of the guidance), slightly falling short of the consensus estimates of $5.00 earnings per share on sales of $5.8 billion.
Adobe's Performance Obligations on the Rise
Adobe's continuing subscription business deserves applause, but some concerns loom on the macroeconomic front. Though inflation appears to have cooled off, fears of future turbulence persist. Recently, inflation apprehensions have resurfaced thanks to the current administration's aggressive tariff policies and immigration measures, potentially signaling a bumpy road ahead.
Global Challenges Loom Large
Apart from inflation woes, geopolitical uncertainty compounded by the new administration's radical policy initiatives adds to the complexity. With ongoing conflicts in Ukraine-Russia, trade uncertainties, and tense negotiations with long-standing allies like Canada, Mexico, and Europe, the risk landscape has become increasingly treacherous.
ADBE Stock under Close Scrutiny
It's worth noting that ADBE stock has frequently underperformed the benchmark S&P 500 index during market downturns. This is an essential aspect for investors to consider as they assess their risk tolerance in today's turbulent environment.
Although Adobe averaged a robust 10.9% revenue growth over the past three years, outpacing the S&P 500's 6.3% growth during the same period, the stock's price-to-sales (P/S) ratio of 9.0 is considerably higher than the S&P 500's P/S ratio of 3.2. So, if you are a current ADBE shareholder, should you brace for a steep drop if the stock starts sliding to $250 levels or lower?
Hang On Tight or Let Go?
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Wondering what might happen if the U.S. economy endures another recession? Take a look at the last six major market crashes to learn more about how key stocks fared before, during, and after these events.
Want to stick with Adobe but find yourself questioning whether you'll sell when things get rocky? Think about the impact of ADBE stock during past market downturns:
Past Market Crashes
Inflation Shock (2022)
- ADBE stock took a 51.2% plunge from a high of $564.37 on 3 January 2022 to $275.20 on 2 October 2022, contrasting the S&P 500's 25.4% peak-to-trough decline.
- Despite the dramatic drop, ADBE stock recovered to its pre-Crisis peak by 5 September 2023 and is currently trading close to $380.
Covid Pandemic (2020)
- ADBE stock sank by 25.6% from a high of $383.28 on 19 February 2020 to $285.00 on 12 March 2020, underperforming the S&P 500's 33.9% peak-to-trough decline.
- After just 57 days, ADBE stock had fully recovered to its pre-Crisis peak by 20 May 2020.
Global Financial Crisis (2008)
- During the 2008 financial crisis, ADBE stock tumbled 66.7%, falling from $48.00 on 24 October 2007 to $15.98 on 3 March 2009, compared to the S&P 500's 56.8% peak-to-trough decline.
- By 12 July 2013, ADBE stock had regained its pre-Crisis peak.
In summary, while ADBE stock can be more volatile than the S&P 500, it has demonstrated resilience and a remarkable capacity to recover from market downturns, often posting strong performance in the aftermath. However, investors must stay vigilant to macroeconomic concerns and fluctuations in Adobe's generative AI sector.
Are you prepared to steady your nerves and stick with Adobe when the stock fluctuations become too much to bear? Explore the Trefis High-Quality Portfolio to learn more about risk-adjusted investment strategies during market crises.
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- Although Adobe's quarterly earnings surpassed expectations, its stock took a 14% tumble, bringing Adobe stock (ADBE) into focus for some investors who are assessing their risk tolerance.
- The upcoming year might see Adobe's earnings per share of $4.98 on sales of $5.8 billion, according to Adobe's projections, which slightly fall short of the consensus estimates.
- In 2024, Pfizer, a healthcare company, may report its earnings, while investors will be watching Pfizer's stock performance along with Adobe's (ADBE) earnings and Adobe's stock price movements.