Rosenblatt Raises Price target on Adobe Systems (ADBE) to $112 on Potential Growth

Rosenblatt reiterated a Buy rating on Adobe (NASDAQ: ADBE), and raised the price target to $112.00 (from $90.00), on potential revenue growth and margin expansion. Analyst Kirk Adams has confidence that revenue growth and margin expansion will accelerate over the next two years. Adams says that overall revenue will see a 20% CAGR over that two year period.

Adams commented, "We are raising our price target on Adobe as we have confidence that revenue growth and margin expansion will accelerate over the next two years. Our new eighteen month price target is $112 based on FY2017 earnings of $4.00 with a P/E multiple of 28x. All large cap growth investors should own Adobe."

Adams also added, "In Digital Media, we should begin to see higher ARPU with additions like the recently released Stock product, which we believe the majority of Creative Cloud users will take advantage of over the next two years. We also believe that Adobe will have the ability in the future to raise prices overall. We saw this in the past as new versions of Creative Cloud were released with very little impact to volumes. Additionally, with 20% of their subscriptions coming from new customers, they are creating a whole new base of users that will come to trust Adobe and will become willing buyers of future products. The point solutions offering like Creative Cloud Photography Plan, which includes Photoshop and Lightroom for a $9.99/mo subscription and the similar plan for Adobe Premiere for $19.99/mo are opening the doors to more and more users."

For an analyst ratings summary and ratings history on Adobe click here. For more ratings news on Adobe click here.

Shares of Adobe closed at $86.45 yesterday.

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