Value
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.2 |
| P/S | 7.8 |
| EV/EBITDA | 6.0 |
| Fwd P/E | 9.4 |
| PEG | 9.4 |
| Analyst target | 4.0 |
- ▸Forward P/E: 9.1x
- ▸PEG: 0.59
- ▸Attractively valued
ADBE · Why this verdict
Why Adobe (ADBE) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Adobe is an exceptionally high-quality software franchise (ROE 62%, 28% margins, 128% FCF/NI, wide moat) at a forward P/E of 9.1x, but the price is within 0.1% of the analyst target and the stock sits in a confirmed downtrend below its 200-day average. Own the quality; wait for a pullback before adding.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Adobe earns an ROE of 62% with 28% margins, a Piotroski F-Score of 8/9 and a Rule of 40 score of 49. Quality breakdown | ROE stays above 50% and margins stay above 25% through the next 12 months. | →Stable |
| CounterInsiders sold $31.3M across 12 sales in 90 days, which may signal management sees limited upside at this price. | ||
Free cash flow is 128% of net income and the company has a wide economic moat with compounded returns, which supports durable cash generation. Components | FCF/NI stays above 100% over the next four quarters. | →Stable |
| CounterRevenue growth scores only 5.7 and earnings growth 4.1 out of 10, so the moat is not translating into rapid growth. | ||
Adobe trades at a forward P/E of 9.1x with a PEG of 0.60, which is attractively valued for its quality. Valuation breakdown | Forward P/E stays below 12x while earnings grow. | ↓Deteriorating |
| CounterThe low multiple may reflect investor worry that AI tools erode the franchise, which the numbers cannot rule out. | ||
The price of $250.23 is 0.1% below the $250.53 analyst target, with 9.3% downside to the stop, leaving a reward-to-risk of about 0. Targets | Analysts raise targets above $250, or the price pulls back toward the $231.66 entry level. | ↓Deteriorating |
| CounterAnalysts may be conservative given the quality, and a rising on-balance volume trend could carry the price through the target. | ||
The price is below its 200-day average, whose slope is falling 5.5% per 30 days, in a confirmed downtrend, even though on-balance volume is rising. Momentum breakdown | The price reclaims its 200-day average and the slope turns flat or positive. | ↓Deteriorating |
| CounterRising accumulation volume suggests buyers are defending the stock, so the downtrend may be near an end. | ||
Adobe earns an ROE of 62% with 28% margins, a Piotroski F-Score of 8/9 and a Rule of 40 score of 49.
→StableQuality breakdown
- Expectation
- ROE stays above 50% and margins stay above 25% through the next 12 months.
CounterInsiders sold $31.3M across 12 sales in 90 days, which may signal management sees limited upside at this price.
Free cash flow is 128% of net income and the company has a wide economic moat with compounded returns, which supports durable cash generation.
→StableComponents
- Expectation
- FCF/NI stays above 100% over the next four quarters.
CounterRevenue growth scores only 5.7 and earnings growth 4.1 out of 10, so the moat is not translating into rapid growth.
Adobe trades at a forward P/E of 9.1x with a PEG of 0.60, which is attractively valued for its quality.
↓DeterioratingValuation breakdown
- Expectation
- Forward P/E stays below 12x while earnings grow.
CounterThe low multiple may reflect investor worry that AI tools erode the franchise, which the numbers cannot rule out.
The price of $250.23 is 0.1% below the $250.53 analyst target, with 9.3% downside to the stop, leaving a reward-to-risk of about 0.
↓DeterioratingTargets
- Expectation
- Analysts raise targets above $250, or the price pulls back toward the $231.66 entry level.
CounterAnalysts may be conservative given the quality, and a rising on-balance volume trend could carry the price through the target.
The price is below its 200-day average, whose slope is falling 5.5% per 30 days, in a confirmed downtrend, even though on-balance volume is rising.
↓DeterioratingMomentum breakdown
- Expectation
- The price reclaims its 200-day average and the slope turns flat or positive.
CounterRising accumulation volume suggests buyers are defending the stock, so the downtrend may be near an end.
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 | 3.1 |
| FCF quality | 9.3 |
| Moat | 8.2 |
| Rule of 40 | 8.1 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 62%
- ▸Strong margins: 28%
- ▸Excellent cash conversion: 128% FCF/NI
- ▸Wide economic moat
Growth
4.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
| EPS growth | 4.1 |
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 3.6 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -5.3%/30d — confirmed downtrend
Sentiment
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 2.5 |
| Analyst rating | 5.0 |
| Price target | 6.2 |
- ▸LLM news sentiment: -0.50 (n=1)
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.3 |
- ▸Modest insider selling — $31,344,876 (0.032% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 8.9 |
| growth rank | 4.6 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.3 |
| support resistance | 5.8 |
| 52w position | 3.7 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 7.0 |
| volatility | 3.1 |
| put call | 8.3 |
| implied vol | 4.5 |
| max pain risk | 3.0 |
| beta | 5.5 |
| debt equity | 7.5 |
| news risk | 6.0 |
- ▸Above max pain $150
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.5 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Downgraded from BUY WAIT — price $248.48 vs the analyst target $246.84: -0.7% upside; No upside left.
Engine technical detail
verdict_path:
L4:PATH_A_VALUE_MOS33|V8:TARGET_REACHED|SANITY:BUY+upside<=0Passed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- ASYMMETRY:-0.1=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.09
Upside
-0.7%
Downside
7.6%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeTemporary headwind — High quality (8.8) with weak momentum (3.8)
SuitabilityAggressive — Beta 1.38>1.3
Investment implication
The HOLD_IF_HOLDING verdict reflects the MOMENTUM gate's 3.8<4.5 outcome against Quality at 8.8 and asymmetric R:R of -0.09.
The strongest dimensions are Quality at 8.8, Value at 7.5, and Peer rank at 6.0; the weakest are Momentum at 3.8, Insider at 3.9, and Sentiment at 4.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.09 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Elite Returns And Margins
Trip ifROE falls below 40% from the current 62%.
- P2Strong Cash Conversion Moat
Trip ifFCF/NI falls below 90% from the current 128%.
- P3Attractive Growth Adjusted Valuation
Trip ifForward P/E exceeds 14x from the current 9.1x.
- P4Price At Analyst Target
Trip ifPrice falls to $220.19 or below, from the current $250.23.
- P5Downtrend Below 200 Day
Trip ifThe 200-day average slope falls below -8% per 30 days from the current -5.5%.