Adobe, Settling Down to Better Value (ADBE)

By Douglas A. McIntyre Updated Mar 26, 3:06PM EDT · Published Jun 26, 9:04AM EDT

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Adobe Systems (ADBE-NASDAQ) is a stock we have been a bit cautious on going into the last earnings. We had even noted how shares were priced for perfection. Part of the caution was based on performance and on valuations, but the main issue with the stock is how the new products may or may not contribute to a growth model that is already priced into the stock. Sure enough, after the earnings traders saw the slight upside and the in-line to only a tad-above guidance and sold shares off immediately.

It appears that Goldman Sachs feels the same. Goldman Sachs this morning removed Adobe shares from its Buy List of stocks and downgraded its rating to a "Neutral." The firm noted that it expects it to sustain its 17% revenue growth this year, but it doesn’t see any significant upside to the numbers. The stock had been up 9% since last September, but up over 31% over the last year (compared to an S&P of 20.3%).

Shares of Adobe are down more than 1% so far today at $39.84, and its 52-week trading range is $25.98 to $44.92. Based on forward earnings estimates, Adobe trades at 26.4-times Fiscal NOV-2007 EPS and trades at 23.4-times Fiscal NOV-2008 EPS.

Jon C. Ogg
June 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.