NEW YORK ( Trefis ) -- Adobe (ADBE) - Get Report is seeing increasing pricing of its rich internet apps that are used by web developers to create rich media web applications such as online games and interactive visualizations and are superior to typical HTML applications because they allow faster task completion, do not require opening up of multiple applications and are less-error prone.
Adobe is consistently developing newer versions of Flash software as well as introducing newer products. While we anticipate that its rich Internet apps pricing will reach $198 in the long term, the Trefis community projects a level of around $216. The community estimates translates into a slight upside, as Adobe's rich internet apps operations only contribute about 6% of the company's stock value.
We currently have a Trefis price estimate of $35.65 for Adobe's stock, about 22% above the current market price.
Newer Versions of Flash
Adobe has added new capabilities to the 10.1 version of its Flash player released in 2010. New capabilities include multi-touch features for smartphones and tablets, low CPU usage and low battery usage. Flash's previous version 10 had a few new capabilities that included creation of special effects, 3D pictures and animations. Coming up with newer versions allows Adobe to increase prices on the product's expanded capabilities.
Release of New Internet App Tools
Adobe's AIR, which was released in 2008, triggered more than 100 million downloads since its release. Adobe AIR creates economies of scale as developers can now build an application once and deploy it on any platform. In 2009, Adobe introduced another product Adobe Catalyst, a new professional design tool for rapidly creating applications without having to write or understand the programming code.
Rich Internet Apps is Around 6% of ADBE
According to our estimate, rich internet app operations constitute around 6% of our price estimate for Adobe's stock, and, accordingly, sharp shifts in pricing have a muted impact on our estimated stock value.
The Trefis community projects rich internet applications pricing will increase from around $158 in 2010 to over $216 by 2016, compared to the baseline Trefis estimate of an increase from $143 to $197 during the same period. The member estimates imply a slight upside to our price estimate for Adobe, which already stands well ahead of market price.
complete analysis for Adobe's stock is here.
Trefis members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.
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