Adobe Systems Inc SHORT

Short from $245.09

Market Cap - 120.73B
Beta - 0.76
Forward P/E - 33.49
Trailing P/E - 65.39
P/B - 13.99

- Adobe have recently changed their dynamics of business to a subscription model. Meaning that ADBE will receive lower upfront fees. Alongside this transition, the switching costs have decreased which makes it easier for the clients to switch to competitors.
- The unlimited license Adobe sells (Creative Suite) is 2x the cost of a yearly cloud based license.
- With the new product, they need to keep subscribers for two years minimum to become more profitable than the original product.
- A large chunk of Adobe's business exposure is in Europe - creating large currency headwinds for the company.
- Despite recent earnings and revenues being solid in March, Adobe remains highly dependent on two products which provide over 50% of the revenue (Creative Cloud & Acrobat).

NeroTree Capital rates Adobe Systems Inc as a SELL with a price target of $195.