Trim 10-15% of ADBE exposure immediately at $241 to maintain moderate Underweight at 65-75% of benchmark weight; hard stop $226, structural re-engagement above $268
Trim 10-15% of ADBE exposure immediately at ~$241, target ~65-75% of benchmark weight as residual UW stance; hard stop $226 on close with volume >4M shares; structural re-engagement above $268 on volume confirming death cross reclaim; no synthetic hedge; the trim itself creates dry powder for re-engagement at lower levels or rotation to less rate-sensitive software; this synthesis threads the 9/24 fortress-liquidate lesson, 10/07 ADBE 10-15% trim lesson, and 10/07 BKNG 0.95x tilt ceiling lesson simultaneously while respecting the trader's SELL rejection ($257 entry/$262 stop too tight) and Research Manager's overshoot (50-75% trim exceeds the fortress compounder ceiling).
| Position | Action |
|---|---|
| Current position overweight at ~$241 market price | Trim 10-15% of current exposure immediately; target ~65-75% of benchmark weight as residual UW stance |
| Close below $226 on volume >4M shares | Hard stop triggered; validate further reduction toward June low at $190-204 |
| Sustained close above $268 on volume confirming death cross reclaim | Structural re-engagement; bear thesis functionally broken, re-evaluate UW stance |
Adobe at $241 represents a once-in-a-decade generational entry point: accelerating fundamentals (Q4 FY2026 revenue +12.9% YoY to $6.76B), extreme undervaluation (8.71x forward P/E vs. historical ~25x), AI as a monetization opportunity not disruption threat, and $9-10B annual buybacks compounding per-share metrics.
| Indicator | Value | Signal |
|---|---|---|
| close_10_ema | 239.04 | bullish |
| close_50_sma | 257.99 | bearish |
| close_200_sma | 257.55 | bearish |
| rsi_14 | 45.73 | neutral |
| boll_20_sma | 243.22 | neutral |
| boll_ub | 261.41 | neutral |
| boll_lb | 225.02 | bullish |
| macd | -6.13 | bearish |
| macds | -6.32 | neutral |
| macdh | +0.19 | bullish |
| atr_14 | 8.80 | neutral |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
When: Sustained close above $268 on volume confirming moving average flip
Then: Re-engage Underweight position, bear thesis broken
Valuation is historically extreme and unattached from fundamentals
↩ rebuts: “Bear's framing of ADBE as a 'broken' stock”
EV: +22% (to $294 Aug 31 high); +72-107% (to $415-498 over 18-24 months as P/E re-rates to 15-18x on $27.67 forward EPS) · concedes: Technical damage is real: 50 SMA and 200 SMA overhead at $258; August rally to $294 failed; Macro environment is hostile with 96% probability of no rate cuts in 2026; MACD currently negative at -6.13 on longer timeframe; Sentiment currently neutral/washed out
Adobe's 55% drawdown from peak is not a "generational buying opportunity" but a value trap: the setup requires flawless execution (12-15% revenue acceleration AND 250bps margin expansion simultaneously), a Fed pivot, and death cross reclamation—three things that haven't aligned in 14 months—with the probability-weighted expected return projecting approximately -9% over the next 6-12 months.
EV: -9% · concedes: 89% gross margins and 41% FCF margins do indicate business quality on the surface; Adobe is not going to zero; The business is not broken
→ vs neutral: The 'wait for confirmation' framing is a market-neutral posture designed to feel responsible while doing nothing; a freshly printed death cross with MACD at negative 6.13 does not unwind in a week
→ vs neutral: The neutral analyst wants a 'confirmed reclaim' of 258 before acting — that is watching a house burn and wanting to see a few more flames before calling the fire department
→ vs conservative: The conservative analyst's instinct to wait for a confirmed break of 230 is overly passive; better trade is fading every bounce into resistance at 262 with asymmetric risk-reward of about 5 points risked to make 15-25
→ vs aggressive: The technical analyst's double bottom near 231 and positive MACD histogram tick of plus 0.19 is not 'basing' — it is a bear market rally that ran into overhead supply at the 50 and 200 SMA cluster and rolled over; the 0.19 print is the smallest possible positive reading and easily reversed
| vwma_20 | 238.38 | bullish |
Support: 231.65 · 230 · 225.02 · 218.8 · 204.02 | Resistance: 243.22 · 250 · 257.55 · 257.99 · 261.41 · 294
ADBE has been in a sustained downtrend since May 2025 (peak $421.77), having experienced a peak-to-trough drawdown of ~55% to the June 2026 capitulation low of $190.12. After a sharp +55% rally to $294.13 (Aug 31, 2026), the stock rolled over -21.5% in four weeks, closing Oct 8 at $241.05 near the recent range floor. The 50 SMA and 200 SMA are clustered at ~257.5-258, both well above price, with a recent death cross confirming structural bearishness. The Oct 8 session printed a wide-range reversal bar (low 231.65 to high 241.19), exceeding the 14-day ATR of 8.80, suggesting potential short-term bottoming. Key levels: support at $231.65/$230/$225.02 (Bollinger lower band); resistance at $243.22 (Bollinger middle), $250, and $257.55/$257.99 (50/200 SMA). The tape is constructive but unconfirmed; a close above $250 with expanding MACD histogram would shift bias constructive, while a sustained close below $230 would re-open downside to $204.
Market Cap
$93.82 B
Share Price
~$241
52-Week Range
$190.12 – $363.70
50-Day MA
$258.44
200-Day MA
$258.13
Beta
1.415
Dividend Yield
0.0%
Revenue FY2022
$17,606 MM
Revenue FY2023
$19,409 MM
Revenue FY2024
$21,505 MM
Revenue FY2025
$23,769 MM
Revenue TTM
$25,970 MM
Gross Profit FY2022
$15,441 MM
Gross Profit FY2023
$17,055 MM
Gross Profit FY2024
$19,147 MM
Gross Profit FY2025
$21,218 MM
Gross Profit TTM
$23,179 MM
Operating Income FY2022
$6,098 MM
Operating Income FY2023
$6,650 MM
Operating Income FY2024
$6,741 MM
Operating Income FY2025
$8,706 MM
Operating Income TTM
~$9,242 MM
Net Income FY2022
$4,756 MM
Net Income FY2023
$5,428 MM
Net Income FY2024
$5,560 MM
Net Income FY2025
$7,130 MM
Net Income TTM
$7,284 MM
Diluted EPS FY2022
$10.10
Diluted EPS FY2023
$11.82
Diluted EPS FY2024
$12.36
Diluted EPS FY2025
$16.70
Diluted EPS TTM
$17.91
Gross Margin FY2022
87.7%
Gross Margin FY2023
87.9%
Gross Margin FY2024
89.0%
Gross Margin FY2025
89.3%
Gross Margin TTM
~89.3%
Operating Margin FY2022
34.6%
Operating Margin FY2023
34.3%
Operating Margin FY2024
31.4%
Operating Margin FY2025
36.6%
Operating Margin TTM
35.6%
Revenue Q2 FY25 (Feb-25)
$5,729 MM
Revenue Q3 FY25 (May-25)
$5,987 MM
Revenue Q4 FY25 (Aug-25)
$6,194 MM
Revenue Q1 FY26 (Nov-25)
$6,398 MM
Revenue Q2 FY26 (Feb-26)
$6,618 MM
Revenue Q3 FY26 (May-26)
$6,760 MM
YoY Growth Q2 FY25
11.4%
YoY Growth Q3 FY25
10.6%
YoY Growth Q4 FY25
12.6%
YoY Growth Q1 FY26
11.7%
YoY Growth Q2 FY26
12.8%
YoY Growth Q3 FY26
12.9%
Gross Margin Q2 FY25
89.0%
Gross Margin Q3 FY25
89.3%
Gross Margin Q4 FY25
89.5%
Gross Margin Q1 FY26
89.6%
Gross Margin Q2 FY26
89.2%
Gross Margin Q3 FY26
88.7%
Net Income Q2 FY25
$1,624 MM
Net Income Q3 FY25
$1,772 MM
Net Income Q4 FY25
$1,856 MM
Net Income Q1 FY26
$1,889 MM
Net Income Q2 FY26
$1,712 MM
Net Income Q3 FY26
$1,827 MM
Diluted EPS Q2 FY25
$3.85
Diluted EPS Q3 FY25
$4.18
Diluted EPS Q4 FY25
$4.45
Diluted EPS Q1 FY26
$4.60
Diluted EPS Q2 FY26
$4.25
Diluted EPS Q3 FY26
$4.62
Operating Margin Q4 FY26
34.8%
R&D Q4 FY26
$1.288B
Cash & Equivalents 2026-08-31
$4,359 MM
Cash & Equivalents 2025-08-31
$4,982 MM
Short-Term Investments 2026-08-31
$1,280 MM
Short-Term Investments 2025-08-31
$958 MM
Total Cash & ST Inv. 2026-08-31
$5,639 MM
Total Cash & ST Inv. 2025-08-31
$5,940 MM
Accounts Receivable 2026-08-31
$2,081 MM
Total Current Assets 2026-08-31
$9,158 MM
Total Current Assets 2025-08-31
$9,412 MM
Goodwill & Intangibles 2026-08-31
$14,993 MM
Goodwill & Intangibles 2025-08-31
$13,417 MM
Total Assets 2026-08-31
$29,981 MM
Total Assets 2025-08-31
$28,754 MM
Current Deferred Revenue 2026-08-31
$7,094 MM
Current Deferred Revenue 2025-08-31
$6,385 MM
Current Debt 2026-08-31
$1,597 MM
LT Debt & Cap Lease 2026-08-31
$5,076 MM
LT Debt & Cap Lease 2025-08-31
$6,562 MM
Total Liabilities 2026-08-31
$18,217 MM
Total Liabilities 2025-08-31
$16,984 MM
Stockholders' Equity 2026-08-31
$11,764 MM
Stockholders' Equity 2025-08-31
$11,770 MM
Treasury Stock 2026-08-31
($55,619 MM)
Treasury Stock 2025-08-31
($46,373 MM)
Retained Earnings 2026-08-31
$50,594 MM
Retained Earnings 2025-08-31
$43,516 MM
Current Ratio
0.77
Net Debt
$2.0B
Debt/Equity
57.7%
Operating Cash Flow Q1 FY26
$3,160 MM
Operating Cash Flow Q2 FY26
$2,958 MM
Operating Cash Flow Q3 FY26
$2,165 MM
Operating Cash Flow Q4 FY26
$2,523 MM
Free Cash Flow Q1 FY26
$3,126 MM
Free Cash Flow Q2 FY26
$2,921 MM
Free Cash Flow Q3 FY26
$2,107 MM
Free Cash Flow Q4 FY26
$2,438 MM
LTM Free Cash Flow
~$10,592 MM
LTM FCF Margin
~41%
OCF/Net Income Ratio
1.5x
Buybacks Q1 FY26
($2,474 MM)
Buybacks Q2 FY26
($2,478 MM)
Buybacks Q3 FY26
($2,111 MM)
Buybacks Q4 FY26
($2,232 MM)
LTM Buybacks
($9,295 MM)
Cumulative Treasury Stock
$55.6B
P/E (TTM)
13.46
Forward P/E
8.71
PEG Ratio
0.56
P/B
8.01
EV/EBITDA
~10.0 (est.)
EV/Revenue
~3.7
Profit Margin
28.0%
ROE
61.9%
ROIC (est.)
~30%+
ROA
20.1%
FCF TTM
$9.35B
FCF Yield
~10%
Forward EPS
$27.67
Revenue CAGR (FY2022-TTM)
14.1%
Revenue YoY FY2024
10-11%
Revenue YoY FY2025
10.5%
Revenue YoY TTM
~9%
ARR Growth
~10-12%
Gross Retention
>90%
Strengths
Concerns
Adobe Inc. operates three primary segments—Digital Media (Creative Cloud, Document Cloud, Firefly), Digital Experience (enterprise marketing and analytics), and Publishing & Advertising—generating $25.97B in TTM revenue with an overwhelmingly subscription-based SaaS model. The company demonstrates exceptional profitability with 89%+ gross margins and 35.6% TTM operating margins, while maintaining elite free cash flow generation of approximately $10.6B LTM (~41% FCF margin). Valuation metrics suggest significant undervaluation: forward P/E of 8.71x versus historical 25x average, PEG ratio of 0.56, and ~10% FCF yield, though these discounts reflect market concerns about generative AI disruption and competitive threats from Figma, Canva, and Microsoft. Management continues aggressive capital return with $9.3B in LTM buybacks, though this pace exceeds FCF generation and has contributed to negative tangible book value and elevated debt-to-equity ratios.