Adobe Trade Call: Valuation Rebound with AI Catalysts

19 days ago

"Now, for my upside potential on Adobe, the company has grown 14% earnings per share, has grown 13% this year, expected to grow 12% over the next two years. So 12 to 13% average earnings per share growth. And this is what I put in over here. 12% for the next 5 years. I put in a trailing P of 17 because the trailing it's 17. And I put in the same P for 2030. Assuming no multiple expansion, no multiple contraction, I will get about 78% on the upside or about a 12.2% annual return on Adobe. If I'm buying Adobe today, if I want to double my money in this case, I would have to pay about 314 for Adobe. But I'm being honest with you guys. I believe 15 and 17 times earnings, that's like my worst case scenario."

The speaker presents a trade call for Adobe (ADBE) by highlighting its low current earnings multiple relative to historical levels and robust earnings growth. He outlines a scenario where, with a purchase price around 314, the stock could potentially double its value over the next 5 years, emphasizing both fundamental strength and an AI-driven rebound.

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