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Adobe Upgraded to Overweight by Atlantic on Fundamentals

'Its total addressable market is vast and expanding, and we expect Adobe to retain its market share,' Atlantic Equities says on upgrading the stock to overweight.
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Adobe  (ADBE) - Get Adobe Inc. Report was upgraded to overweight from neutral by Atlantic Equities, with a share-price target increase to $97 from $80, based on fundamentals.

“Its total addressable market is vast and expanding, and we expect Adobe to retain its market share, delivering mid-teens revenue growth and margin expansion,” Atlantic analyst Chris Hickey wrote in a commentary cited by CNBC.

“In addition, we have a differentiated view on the Digital Experience segment, and are above consensus, due to our positive take on new leadership there.”

Also, new disclosures indicate Adobe has done better attracting new users to Creative Cloud, Hickey said, according to The Fly. The Creative Cloud user base may well be big enough to allow Adobe to raise prices, he said.

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And the installed base of Creative Suite holdouts represent a larger opportunity than expected, Hickey said, according to The Fly.

The upgrade didn’t appear to help Adobe stock, which recently stood at $682.12, down 0.91% in an up market.

Morningstar analyst Dan Romanoff assigns the company a wide moat, though he thinks the stock is overvalued, with fair value at $610.

“Adobe has come to dominate in content creation software with its iconic Photoshop and Illustrator solutions,” he wrote in a September commentary. “Both [are] now part of the broader Creative Cloud, which is now offered via a subscription model.

“The company has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation.”