July 19, 2019

ADBE – Market expectations are for record Uniform ROA expansion, but management has concerns about margins, revenues, and their Adobe Experience Platform


  • Adobe Inc. (ADBE:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 40.7x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their margins, revenue targets, and the Adobe Experience Platform
  • Specifically, management appears concerned about brand awareness in the Digital Media business, and they may be concerned about their ability to reach their Q3 2019 revenue target. Furthermore, they may lack confidence in their ability to show Enterprise customers the value of the Adobe Experience Platform as the underlying infrastructure for engaging with customers, and they appear concerned about the sustainability of recent operating margin improvements. Finally, management appears concerned about the impact of seasonality on Q3 2019 revenue and margins.
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