This Adobe stock price forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary

• I reiterate the buy rating I gave Adobe last October 4. 
• Adobe’s stock is now trading 33.33% higher than October 4’s closing price of $276.96. 
• You can do some profit-taking now or wait until ADBE hits $390. 
• My fearless forecast is Adobe will again report record numbers next month. My guestimate is  Adobe will report Q1 revenue of $3.1 billion and GAAP EPS of $1.85.
• If my Q1 prediction proves true, ADBE can hit $380 by end of March.

My last Adobe (ADBE) stock price forecast was last October 4. The stock has since risen +33.33%. I argued last October that ADBE deserved a 1-year PT of $350, well above TipRanks’ consensus of 317.2.  it took just four months for ADBE to go beyond my $350 prediction. ADBE posted a new 52-week high of 374.48 last February 5. 

I sold half of my position at $361 to $366 price range. However, I am holding on to the remaining shares, waiting the price to hit $380.  Adobe’s invidious prevailing monopoly over creative/content creation software products convinced me that it will again report record quarterly revenue next month.

Adobe’s Q1 2020 revenue will likely breach $3.1 billion. GAAP EPS will probably be around $1.85. If this hypothesis proves true, ADBE will probably trade at $380 or higher by next month.  This will really happen if Adobe again reports additional increase in Creative Cloud revenue for Q1 next month.

Adobe Is AI-Driven And It Keeps Coming Up With Relevant Software

The Sensei AI-powered Lightroom and Photoshop for iPad is definitely helping Adobe attract more subscribers. I am staying long primarily due to the growing multi-device compatibility of Creative Cloud software. The ability to use the important features of Photoshop and Lightroom on iOS devices justified Adobe’s price increase in Creative Cloud subscription fees. 

I also appreciate that Adobe made a dedicated touchscreen/tablet-specific digital painting software, Fresco. Fresco is available for Windows and iOS tablets. Fresco’s release means there will be less people buying Corel’s Painter and Procreate on iOS.

The less customers for Adobe’s much smaller rivals, the bigger chances these companies will go bankrupt.  Fresco is largely why Wacom released a $399.95 Windows 10/macOS drawing tablet.  I remain long ADBE because the company is coming up with new lightweight software programs that accelerates the workflow of creative professionals. Aside from Fresco, Adobe’s Character Animator was also a recent release that made a big impact. Character Animator recently won an EMMY award for its pioneering technology in live, facial recognition-based animation. 

The generative or AI-driven design iterations in Adobe Spark is also why I remain long ADBE. Adobe only charges $9.99/month for Spark. Spark is very useful because it helps graphic artists come up with dozens of design mockups in minutes. The Sensei AI-driven Adobe Spark will eventually kill commercial templates-driven design services like Canva and PicMonkey.

Creative Cloud posted a record Annual Recurring Revenue of $6.48 billion in FY 2019, 21% higher than 2018’s $5.43 billion. If we assume use last year’s growth rate, it is highly feasible Creative Cloud will make $7.84 billion in FY 2020. 

Adobe Stock Is Boosting Creative Cloud’s Growth

Aside from attracting new subscribers due to new iOS-friendly software products, Creative Cloud’s growth is also getting a boost from Adobe Stock. As per Q4 2019’s report, Adobe Stock’s annual revenue grew 30% year-over-year. You should go long ADBE because it is trying to kill the growth of Shutterstock (SSTK) and Getty Images. Deadline-centric workflows of creative professionals mean they are habitual user of stock images/videos. Adobe Stock is emerging as the go-to platform to cheaply purchase royalty-free photos/videos for commercial work.

Adobe Stock is tightly integrated with Creative Cloud software products. Creative Cloud subscribers are more likely to use Adobe Stock’s monthly plans to quickly access royalty-free stock photos, illustrations and video clips for their projects. Adobe Stock’s rapid growth is due to its affordable monthly subscription fees/credit packages.

Final Thoughts

Adobe Sensei is helping Creative Cloud retain its monopoly on print/web design and movie/TV production. Adobe is now also a bigger player in the 3D design software market. Adobe’s purchase of Allegorithmic Software last year gave it the best 3D texturing tools for architecture, engineering, video games, movies, and AR/Virtual Reality content creation. Algorithmic’s Substance Alchemist is why HP, Inc. (HPQ) partnered with Adobe on Project Captis. Project Captis lets people quickly turn physical materials into digital 3D materials.

Adobe does not still have a dedicated 3D CAD (Computer-Aided Design) software product that can disrupt Autodesk’s (ADSK) AutoCAD. However, Adobe’s Mixamo, Aero, Dimension CC, and Substance Suite is helping the company attract more 3D artists/content creators. Mixamo’s code-free animation is now compatible with major game design engines like Unity and Unreal. It is now more useful for game developers. 

My undying optimism over Adobe’s stock is congruent with its super bullish one-year market trend signal from I Know First. The stock-picking AI of I Know First has a high 0.72 predictability score over ADBE’s 1-year trend pattern. Trust me and trust I Know First, Adobe’s stock will breach $380 pretty soon.

Past Success With Adobe Stock Price Forecast

I Know First has been bullish in the past on Adobe stock price forecast. On October 10, 2019, the I Know First algorithm issued a bullish forecast for Adobe. The algorithm successfully forecasted the movement of the Adobe’s shares on the 3 months time horizon. ADBE’s shares rose by 21.81% in line with the I Know First algorithm’s forecast. See chart below.

Here at I Know First, our stock prediction algorithm has used machine learning stock market modeling techniques and generated stock market predictions for some 10,500 assets worldwide for short-term and long-term time horizons, ranging from 3 days to a year, to be used for algorithmic trading. Since 2011, we have been providing daily S&P 500 Forecast, Forex forecast, gold price forecast, Apple stock forecast, NVDA stock prediction and much more. Highly appreciated by institutional clients, as well as private investors and traders, our market forecast helps to identify the top stock picks in the market.

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