Adobe: Panic Will Pass – Initiating With A Buy

Summary:

• I’m initiating Adobe with a buy after a 12% sell-off post-Q4 so far because I see an opportunity in the market’s not-so-optimistic outlook on the business and its AI monetization.
• Adobe didn’t guide too well for two quarters in a row compared to Mr. Market’s expectations, and I think the company is more likely to outperform expectations in 2025.
• I believe Adobe’s focus on quality and usability over immediate profits in AI will play off big time down the road.
• I share my positive sentiment on Adobe here and why I see more upside into 2025.

Investment Thesis

Adobe reported 3QFY24 earning results in September, causing a dramatic market reaction to softer-than-expected Q4 guidance, overshadowing a stellar Q3 performance. What do you know? We saw the same thing play out Wednesday after

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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