Value
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.5 |
| P/S | 8.0 |
| EV/EBITDA | 6.4 |
| Fwd P/E | 9.6 |
| PEG | 9.5 |
| Analyst target | 7.5 |
- ▸Forward P/E: 8.0x
- ▸PEG: 0.58
- ▸Attractively valued
ADBE · Why this verdict
Why Adobe (ADBE) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company carries a wide economic moat designation, posts net margins of 29%, converts 125% of reported earnings into free cash flow, and earns a Piotroski F-Score of 8 out of 9 — a combination that places it among the highest-quality franchises in enterprise software. Quality breakdown | Net margins hold above 25% and free cash flow conversion stays above 100% of net income over the next four quarters, confirming the profitability and cash quality are structural rather than cyclical. | →Stable |
| CounterWide-moat designations can erode faster in software than in other industries if a competing platform captures meaningfully more creative or marketing workloads; margin compression would be the leading indicator before any moat impairment shows up in revenue trends. | ||
At a forward P/E of 7.5 times and a PEG of 0.57, the stock is attractively priced relative to both its own history and peers, with approximately 29% headroom remaining to the analyst consensus target of $265.40 — a favorable risk/reward ratio of 5.2-to-1. Valuation breakdown | The stock progressively re-rates toward $265.40 over the next 12 months as the temporary technical headwind abates and the quality of the franchise is re-recognized by the market. | →Stable |
| CounterA multiple that has compressed materially may reflect a durable structural change in growth expectations rather than a temporary mispricing; the low forward multiple is only a genuine bargain if consensus growth assumptions prove achievable. | ||
The company has beaten earnings estimates in each of the last four quarters, averaging approximately 2.5% above consensus, with the most recent beat of 2.5% on an estimate of $5.81 posted in the quarter ending June 11, 2026. Earnings | The next quarterly print, due approximately September 10, 2026, extends the beat streak and confirms the earnings cadence is intact despite the stock's sustained technical weakness. | →Stable |
| CounterAverage surprises have been modest at roughly 2.5%, suggesting the company is largely meeting rather than materially exceeding expectations; modest beats do not typically re-rate a compressed multiple, and any slip would damage confidence disproportionately given the current negative sentiment. | ||
The stock has formed a death cross, is trading below all key moving averages with a 30-day slope of -5.3%, and the RSI has declined to 35 with a bearish MACD — a confirmed downtrend that creates near-term price risk and makes the current entry timing challenging. Warnings | A sustained close above the 200-day moving average with a positive slope shift would confirm the downtrend is reversing and materially reduce the technical risk profile for new entrants. | →Stable |
| CounterHigh-quality businesses trading at compressed multiples near technical extremes often form durable bottoms when fundamental buyers step in; the 29% upside to the analyst target provides meaningful margin of safety to withstand continued near-term volatility. | ||
A recent officer departure or appointment has triggered a regulatory filing, introducing execution and strategic continuity uncertainty at a time when the stock is already under technical pressure and in need of a positive catalyst. Gates warning | The company maintains its earnings beat streak for 2 consecutive quarters following the officer transition, demonstrating that leadership continuity has not impaired execution. | →Stable |
| CounterLeadership transitions at established software companies with deep product organizations frequently resolve with limited long-term impact; the filing may reflect a routine succession rather than a strategic disruption. | ||
The company carries a wide economic moat designation, posts net margins of 29%, converts 125% of reported earnings into free cash flow, and earns a Piotroski F-Score of 8 out of 9 — a combination that places it among the highest-quality franchises in enterprise software.
→StableQuality breakdown
- Expectation
- Net margins hold above 25% and free cash flow conversion stays above 100% of net income over the next four quarters, confirming the profitability and cash quality are structural rather than cyclical.
CounterWide-moat designations can erode faster in software than in other industries if a competing platform captures meaningfully more creative or marketing workloads; margin compression would be the leading indicator before any moat impairment shows up in revenue trends.
At a forward P/E of 7.5 times and a PEG of 0.57, the stock is attractively priced relative to both its own history and peers, with approximately 29% headroom remaining to the analyst consensus target of $265.40 — a favorable risk/reward ratio of 5.2-to-1.
→StableValuation breakdown
- Expectation
- The stock progressively re-rates toward $265.40 over the next 12 months as the temporary technical headwind abates and the quality of the franchise is re-recognized by the market.
CounterA multiple that has compressed materially may reflect a durable structural change in growth expectations rather than a temporary mispricing; the low forward multiple is only a genuine bargain if consensus growth assumptions prove achievable.
The company has beaten earnings estimates in each of the last four quarters, averaging approximately 2.5% above consensus, with the most recent beat of 2.5% on an estimate of $5.81 posted in the quarter ending June 11, 2026.
→StableEarnings
- Expectation
- The next quarterly print, due approximately September 10, 2026, extends the beat streak and confirms the earnings cadence is intact despite the stock's sustained technical weakness.
CounterAverage surprises have been modest at roughly 2.5%, suggesting the company is largely meeting rather than materially exceeding expectations; modest beats do not typically re-rate a compressed multiple, and any slip would damage confidence disproportionately given the current negative sentiment.
The stock has formed a death cross, is trading below all key moving averages with a 30-day slope of -5.3%, and the RSI has declined to 35 with a bearish MACD — a confirmed downtrend that creates near-term price risk and makes the current entry timing challenging.
→StableWarnings
- Expectation
- A sustained close above the 200-day moving average with a positive slope shift would confirm the downtrend is reversing and materially reduce the technical risk profile for new entrants.
CounterHigh-quality businesses trading at compressed multiples near technical extremes often form durable bottoms when fundamental buyers step in; the 29% upside to the analyst target provides meaningful margin of safety to withstand continued near-term volatility.
A recent officer departure or appointment has triggered a regulatory filing, introducing execution and strategic continuity uncertainty at a time when the stock is already under technical pressure and in need of a positive catalyst.
→StableGates warning
- Expectation
- The company maintains its earnings beat streak for 2 consecutive quarters following the officer transition, demonstrating that leadership continuity has not impaired execution.
CounterLeadership transitions at established software companies with deep product organizations frequently resolve with limited long-term impact; the filing may reflect a routine succession rather than a strategic disruption.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Adobe is a wide-moat software franchise with strong margins, exceptional cash conversion, and an attractive forward multiple well below analyst targets, but a confirmed death-cross downtrend and a recent C-suite change create near-term uncertainty that favors a patient, staged entry on weakness.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.0 |
| FCF quality | 9.3 |
| Moat | 8.2 |
| Rule of 40 | 8.2 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 63%
- ▸Strong margins: 29%
- ▸Excellent cash conversion: 128% FCF/NI
- ▸Wide economic moat
Growth
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
| EPS growth | 3.6 |
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 2.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -6.0%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.8 |
| Analyst rating | 5.0 |
| Price target | 8.4 |
- ▸LLM news sentiment: +0.37 (n=9)
- ▸Analyst upside: 27%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $16,837,374 (0.019% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.5 |
| quality rank | 9.1 |
| growth rank | 4.3 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.3 |
| support resistance | 6.1 |
| 52w position | 0.4 |
| gap | 5.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 7.8 |
| volatility | 2.3 |
| put call | 0.0 |
| implied vol | 3.9 |
| beta | 5.3 |
| debt equity | 7.3 |
- ▸Elevated put/call: 2.07
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 4.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.8 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Wide-moat business. Accumulate on weakness.
Engine technical detail
verdict_path:
L4:PATH_E_WIDE_MOAT|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (7)
- MOMENTUM:6.2>=5.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:69d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.3<1.5@spot
Warning (2)
- DEATH_CROSS:quality=8.8>=7.5+momentum=6.2>=5.0 exempted
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.28
Upside
+17.2%
Downside
13.5%
Sizing output
STARTER
SetupRecovery — Death cross but MACD improving, RSI 51
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -48% (>40% off 52w high)
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's 1.3<1.5@spot outcome against Quality at 8.8 and asymmetric R:R of 1.28.
The strongest dimensions are Quality at 8.8, Value at 8.4, and Sentiment at 6.6; the weakest are Technical at 3.9, Growth at 4.7, and Risk (lower is worse) at 4.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 1.28 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Strong Margin Profile
Trip ifNet margin falls below 22% for 2 consecutive quarters, indicating material compression in the profitability profile from the current 29% level.
- P2Valuation Discount 29pct Upside
Trip ifAnalyst consensus price target falls below $220, reducing the remaining upside to less than 7% from the current price of $206.36.
- P3Consistent Earnings Beat Pattern
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Death Cross Falling Knife Downtrend
Trip ifStock closes above its 200-day moving average for 10 consecutive trading days and the 30-day MA slope turns positive from current -5.3%.
- P5C Suite Leadership Transition Risk
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters following the officer transition, confirming execution has not been impaired.