$ADBE deteriorating MOAT ; Still Expensive; PT < $350

3月11日

- ADBE is one of the blue chip company of the last decade.

- However, Chicken has come to roost.
- Core products of ADBE like acrobat are useless. One can use ChatGPT or any AI tool to parse and get the information. Google Doc for creating a PDF

- Adobe designer tool might still be used but AI tools are taking over which provides done for you. Apart from that Canva & Figma are way better and easier to use ADBE

- ADBE products are hard to use and have huge learning curve. On top of that, ADBE engages in shady subscription practices where it doesn't let user cancel subscription and ask people to go through customer support potentially delaying cancellation to bill users.

- ADBE despite having huge datasets of images isn't able to launch a good AI model. Firefly by Adobe is Joke and not good enough.

Fundamentally, it is still trading at a premium.

Year | 2025 | 2026 | 2027 | 2028
EPS | 20.39 | 23.01 | 25.56 | 27.02
EPS % growth | 11.61% | 12.82% | 11.11% | 5.72%

Base Case ( Lenient ):
Ideally, for a blue chip company with a MOAT growing EPS at 11-15% ; Failr forward P/E should be 20. For them, who are willing to pay forward p/e of 20

Year | 2025 | 2026 | 2027 | 2028
Stock price (F. p/e = 20) | 407 | 460 | 500 | 540

Base Case ( conservative ):
However, I believe ADBE MOAT has been severely challenged and should doesn't command a premium multiple. Therefore, according to me, fair forward p/e should be 15

Year | 2025 | 2026 | 2027 | 2028
Stock price (F. p/e=15) | 305 | 345 | 383 | 405

Extreme Bear Case :
If we account for recession, We could see further compression in forward p/e ~ 10. Extreme bear case, where they miss EPS or revenue or both and guide lower.

Year | 2025 | 2026 | 2027 | 2028
Stock price (F. p/e=10) | 200 | 230 | 255 | 270

Bull Case ( F. p/e = 25 )
Year | 2025 | 2026 | 2027 | 2028
Stock price (F. p/e=25) | 509 | 575 | 639 | 675

3月11日

注释

- Abanding Figma deal was a blunder by $ADBE. It was an expensive deal but shareholders and Leadership got myopic and didn't put customers first.

- Designers love working with Figma. It should have paid ADBE in the long term. Instead of acquiring Figma and removing competition they went with Share buyback to appease shareholders in the short term.

3月13日

注释

Looked at the earning report:

- Earning was lackluster, innovation is still not there.
- Company has an execution problem and filled with bureaucracy.

What I'm looking from
ADBE
to get confidence (and/or) :

1) Good Execution in Innovation - Increase in R&D and hiring AI/ML talent - Most Important
2) Acquisition - Most Important
3) Reducing Opex by Layoff of useless roles - less important
4) Stock buy backs - less important

4月4日

注释

We are close to 350 folks!

4月17日

交易结束：到达目标

🎯 ADBE < 350