This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Adobe Shares Continue Recent Run

While all eyes are focused on Dow 11,000, Adobe (ADBE) is quietly staging its own end-of-the-year rally.

Since early September, shares of the digital-imaging powerhouse have appreciated by 38%, including a nearly 5% gain Tuesday to $36.97.

The latest stock rise comes on the heels of Monday's announcement that Adobe completed its $3.4 billion acquisition of Macromedia, announced in early April. Macromedia shares will be converted into the right to receive 1.38 shares of Adobe common stock.

Wasting little time, Adobe quickly announced three new product bundles that combine the features of its popular Creative Suite with Macromedia's latest flash products. Two of the bundles are already available; the third will ship in early 2006.

The news spurred Piper Jaffray analyst Gene Munster to raise his price target for Adobe to $41 from $37. "These bundles are out two months ahead of our expectations, and more importantly if historical trends hold, and our survey findings from 100 Adobe and Macromedia customers are accurate, we believe these bundles will increase revenue per customer," he said.

Munster noted that past bundles have spurred top-line growth for both companies. When the first version of Creative Suite shipped in 2003, Adobe's revenue grew by 29%; it rose by just 11% in the preceding year. When Macromedia launched its first bundle, the company reversed a 17% revenue decline in 2002 and saw a 4% revenue increase in 2003, Munster said in a note to clients.

Other analysts, however, wondered if the all the good news has already been priced into Adobe's stock. Oppenheimer's A. Sasa Zorovic downgraded Adobe to neutral from buy Monday, saying, "at this point, we are concerned about the stock's valuation as well as a confluence of 'moderate,' in our view, competitive threats."

He said the company is facing increasing competition from Microsoft (MSFT) in both the document publishing and imaging markets, as well as from various open-source providers. Neither Oppenheimer or Piper Jaffray have an investment banking relationship with Adobe.

As of Monday's close, Adobe was trading at 29 times estimated 2006 earnings.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs