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.

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