Adobe: The secret of (stock market) success

While technology giants such as Apple, Microsoft or Amazon are omnipresent in the (financial) media, there are others that are comparatively little reported. And this despite the fact that business is also going very well and the corresponding shares have given investors a lot of pleasure over the years.

Strong sales growth

A nice example of this is Adobe (WKN: 871981 / ISIN: US00724F1012). The US group, known worldwide for its programs such as the PDF file reader “Adobe Reader”, the media player “Adobe Flash Player”, the image processing software “Adobe Photoshop” or the typesetting and text layout program “Adobe InDesign” has been growing for many years fast. In recent years, sales have increased by an average of 21 percent annually (2019/2020: 12.9 billion US dollars).

In 2013, Adobe switched to a subscription model. This ensured very steady and strong sales growth in the years that followed. Since then, Adobe stocks have only known the way up.

The subscription model is the secret of success

The key to success in recent company history has proven to be the change in strategy from pure software sales to subscription models. In 2013, the Californian company switched to a subscription model.

As a result, Adobe was able to record strong sales growth and gradually increase profitability. Today, recurring sales make up over 90 percent of total revenue, which has greatly improved the predictability and predictability at Adobe.

Focus on business figures: the analysts are very optimistic

Investors are currently eagerly awaiting the current figures for the second fiscal quarter 2020/2021 (as of the end of May 2021), which Adobe will announce on June 17 after the US market closes. According to analysts’ estimates, the group is likely to have continued on its growth path.

For the second fiscal quarter, industry experts expect annual sales to rise 19 percent to an average of 3.7 billion US dollars. Earnings per share should average $ 2.81, down from $ 2.28 per share for the same period last year.

Share profit: plus 34 percent per year

If Adobe can convince again with its current business figures, the share listed in the S&P 500 and Nasdaq 100 should continue to rise. Over a period of ten years, the price rose an average of 34 percent per year.

New record highs were last reached in mid-June, at times over 460 euros (currently: 453 euros). In terms of charting, the railway is free of upward resistance, so that the next milestones will be set at the next lap marks at 500 and 600 euros.

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Subscription model ensures high course stability

Although Adobe belongs to the technology sector, the share is characterized by its high price stability. The very steady growth in sales through the subscription model has ensured for years that the price declines are comparatively moderate and are quickly made up for. Since switching to the subscription model in 2013, Adobe’s share price has risen like a string.

Conclusion

The long-term business and stock market development shows that Adobe is in no way inferior to the big, even better-known tech giants. Due to the very steady price development, the stock is also interesting for conservative investors. The Adobe share is thus a top recommendation from the US technology sector.

Investors who expect the long-term upward trend of the Adobe share to continue can benefit from price increases with a long certificate (WKN: MA5VBD / ISIN: DE000MA5VBD0).

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