Figma is a vector graphics editor and prototyping tool that is used by designers to create user interfaces, websites, and icons. One of the most in-demand design services is Figma design. ![]() With the advancement of technology, the demand for design services has increased exponentially. “It’s starting to look very attractive, and while we’re not quite there yet, I think the stars are beginning to align for value investors,” he said.The design industry is one of the most rapidly growing industries in the world. Sarhan sees more volatility ahead for Adobe and other software stocks, but said they were starting to jump onto his radar. The stock trades around 20 times forward earnings, its cheapest since late 2012, and below its 10-year average of 33. Nevertheless, the weakness in Adobe’s stock has it looking like a bargain on some metrics. Morgan Stanley downgraded the stock in the wake of those results, warning a slowing growth profile. The tempering of bullishness follows Adobe’s previous report, from mid-June, when it cut its revenue forecast. Creative Cloud accounted for more than 60% of Adobe’s 2021 revenue. The firm moved to the equivalent of a neutral view on the shares, citing “uncertainty about the durability of growth” for the Creative Cloud business, which includes graphic design and video editing software products. And analysts broadly still see Adobe as a reliable grower, with double-digit revenue increases anticipated for the next several years.īMO Capital Markets is less sure on that front. “But in the meantime, valuations are getting compressed because the Fed is in a tightening mode and yields are going through the roof.”Įven before Thursday’s drop, the stock has struggled this year, with a 45% decline that outpaces the 27% drop in the Nasdaq 100 Index.Īdobe, with a market value of nearly $145 billion, has a long history of enriching shareholders: Over the past two decades, the stock has returned 20% a year, about double the return of the S&P 500 Index. “If we see earnings growth explode, which we haven’t yet seen in Adobe, then that bullish catalyst would help lift the stock,” said Adam Sarhan, chief executive officer of 50 Park Investments. There’s a risk that the company cuts its guidance for the current quarter, analyst Gregg Moskowitz wrote this week. The Federal Reserve’s rate increases to fight inflation threaten to push the economy into a recession, weighing on demand and resulting in longer times for clients to sign deals.įor Mizuho, this is a more difficult environment than it expected, with large deals potentially becoming less prevalent. The news sent Adobe shares down 17% on heavy volume, their biggest one-day drop since September 2010, in a rout that erased $29 billion from its market capitalization.Īdobe, the maker of Photoshop photo-editing software and the Acrobat document-creation program, has this year been hampered by the US dollar index near a 20-year high and surging interest rates, representing headwinds to overseas sales and stock multiples. Two firms, Mizuho Securities and BMO Capital Markets, downgraded the stock earlier this week, with Oppenheimer following them on Thursday after the company announced what may mark the biggest ever takeover of a private software company. is not helping either, with analysts opining that the deal seems “extremely expensive.” ![]() Turns out the price is still high even for some one-time Adobe bulls, while news it’s about shell out $20 billion to buy software company Figma Inc. seems like just the kind of technology stock that would provide shelter in a market storm - a huge, profitable, decades-old company with strong brands and double-digit revenue growth, selling at the cheapest valuation in almost a decade.
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