What changed
$ADBE — BUY 📊 | 6 MONTHS THESIS
🧭 Conviction: HIGH
🎯 FQ2 FY2026 (ends May) | reported Jun 11 | Rev $6.6B | EPS $5.96 vs $5.81 🟢 | Margin 33.8%
💡 Consensus expects declining creative software demand, but Adobe's recent EPS beat and high retention suggest earnings will hold up better than priced; the market is extrapolating a temporary slowdown into a permanent impairment.
📉 Reward/risk: 4.4:1
🏢 Business Quality: 8/10
📊 Valuation: cheap — trailing P/E 8.5x vs. 5yr avg ~25x and peers 20x+; EV/EBITDA ~9x; FCF yield likely >10%; fair value range $286–$390 (12–15x earnings)
🔮 Catalyst: Next quarterly earnings report
💰 Entry: $202.73, stop $182.73, target $290.0
⚖️ Buy ADBE at $202.73 — a deeply undervalued subscription software leader with a 4:1 reward/risk to $290, as the market's recession fears look overblown relative to its durable earnings power.