2) Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 107
Analysts’ Average Price Target: 22.06%
Adobe Inc. (NASDAQ:ADBE) is engaged in developing, marketing, and supporting computer software products and technologies. Its products enable users to express and use information throughout all print and electronic media.
Adobe Inc. (NASDAQ:ADBE) continues to enjoy wide economic moat, primarily because of its high switching costs. This allows the company to generate returns exceeding its cost of capital. The company’s dominance in content creation software with well-established Photoshop and Illustrator solutions continues to strengthen its economic moat. It was able to add new products and features to the suite with the help of organic development and bolt-on acquisitions to drive its comprehensive portfolio of tools utilized in print, digital, and video content creation. Therefore, Wall Street remains optimistic about the company’s unique value proposition and growth potential.
Adobe Inc. (NASDAQ:ADBE)’s AI-driven products, including Firefly AI models, exceeded 12 billion generations, demonstrating strong adoption. Moving forward, the company’s revenue growth should come from its competitive advantage, which is being strengthened by its key customer wins with well-renowned companies like Amazon, Disney, and the US Treasury. As a result, despite the competition, Adobe Inc. (NASDAQ:ADBE) expects continued growth and record net new ARR in FY 2024.
The company has maintained its strong emphasis on AI and subscription services, which should help in expanding its market presence. For 4Q 2024, Adobe Inc. (NASDAQ:ADBE) expects total revenue in the range of $5.50 billion – $5.55 billion and earnings per share (GAAP) of between $3.58 to $3.63.
Analysts at Wells Fargo & Company initiated coverage on the shares of Adobe Inc. (NASDAQ:ADBE), increasing its price objective from $675.00 to $700.00, giving it an “Overweight” rating on 14th June. Notably, 107 hedge funds reported owning stakes in the company at the end of 2Q 2024, as per Insider Monkey.
Polen Capital, an investment management company, released its second-quarter 2024 investor letter and mentioned Adobe Inc. (NASDAQ:ADBE). Here is what the fund said:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
