I just read this little tidbit from an email sent to me from a financial company (I’m still not entirely sure why I’m on their mailing list, and I’m too lazy to remove myself):
Secular trends remain as robust as ever. Although ADBE may face some near-term economic speed bumps, we believe the company remains well positioned to monetize its longer-term growth drivers (digitization of content, mobile, etc.) and gain a greater wallet share on a go forward basis.
New product releases bode well. Management noted that it remains committed to its normal release-cycle (18-20 months) for CS and Acrobat. We believe there will be a lot of pent up demand for these solutions and when coupled with hardware upgrades stemming from new OS releases, we expect very strong growth for CS starting next spring
Still plenty of leverage in this model. We believe ADBE has done a solid job of managing expenses to protect its bottom line and expect this to continue. However, while we believe there is still material room for margin expansion in 2010, we note that the pace and size is dependent on revenue growth
Raising CY10 estimates. While we are leaving our CY09 estimates unchanged at $1.49, given our more bullish stance on the company’s upcoming product release cycle, we are increasing our CY10 EPS to $1.72 from $1.70
Valuation. At $29.89 in AHs, ADBE trades at 18.0x our CY10E of $1.72, which is a premium to its large-cap peers, but below its historical levels. While the stock could take a pause after its recent gains, given the leverage in the model and ADBE’s overall market position, we remain buyers of the stock.
(Copyright © 2008 Oppenheimer & Co. Inc. is a Member of All Principal Exchanges and Member SIPC)
Yes, the email really did say copyright 2008, even though it just came out. Someone forgot to update something somewhere. Here’s another blog post with positive comments about Adobe’s 2010 future.
Anyway, what struck me was the comment about the next version of the Creative Suite coming out 18-20 months after CS4… which would make the ship date around June, 2010 — less than a year from now.
No features have been announced (except the dropping support for all print options and interactive features, of course). ;)
But what do you think? Are you currently using CS3 and will likely skip CS4 and upgrade to CS5? Are you a CS4 user and can’t wait to upgrade to CS5 (assuming it’s going to be a reasonably cool upgrade)? Are you going to stick with CS2 for as long as you can? Do you think their optimism about “strong growth” is warranted? Let us know in the comments section below.
This article was last modified on December 19, 2021
This article was first published on July 17, 2009
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