ADBE · Investment summary · as of 12 August 2026
Priced below what the business already delivers
Business type: Compounder · mature and structurally stable
Size is the strategy's, set against its own position and exposure limits.
At $258.75, ADBE requires a -14% five-year revenue growth rate to justify its enterprise value — less than the business already delivers, at 11%.
The value rests on an exit multiple of 27.8x, a terminal operating margin of 36% and a 8.6% cost of capital. Move any one of them materially and the conclusion moves with it, which is why the required-versus-demonstrated test above carries more weight here than the point value.
| Question | Evidence-based conclusion |
|---|---|
| What drives the business? | Mature and structurally stable. Profitable (TTM EBIT $9,090m on $25,198m to 29 May 2026). |
| What do we forecast? | Revenue growth of 11% demonstrated; a terminal operating margin of 36%; an exit multiple of 27.8x. |
| What does Street forecast? | Not determined — no consensus estimates are joined to this record |
| Where do we differ? | On revenue growth, the difference between what the price requires and what the business has demonstrated is +26.0 percentage points. |
| What is it worth? | Twelve-month target $315.00, +22% from the struck price. Scenario-weighted expected return net of costs +21.8%. |
| Why now? | Date not announced — no dated event that would resolve the disagreement is on file |
| Date or window | Event | Thesis confirmed if | Thesis weakened or refuted if |
|---|---|---|---|
| 10 September 2026 | Next results (date estimated, not issuer-confirmed) | Revenue and margin in line with, or above, the house path | A miss that moves the full-year path below the guided floor |
| Q4 FY2026 release, ~mid-Dec 2026 | Guided ending-ARR growth, FY2027 | FY2027 guided total ending-ARR growth at or above 9% (organic below ~7.5% after ~1.5pp acquisition contribution) | FY2027 guided total ending-ARR growth below 9% (organic below ~7.5% after ~1.5pp acquisition contribution) |
| every quarterly release from Q3 FY2026 | Remaining Performance Obligations, $bn, YoY | Neither leg of the condition opposite is met at this date | RPO declines year over year in any quarter |
| Q3 FY2026 print (~Sep 2026) | GAAP operating margin YoY delta, impairment added back | Neither leg of the condition opposite is met at this date | Third consecutive quarter of YoY GAAP operating-margin compression, ex-goodwill-impairment |
Dates marked as estimated are drawn from the company’s own reporting cadence, not from an announcement.
Not determined — no permanent-loss case with a named cause is on file; a bear valuation is not an impairment case
Estimated probability 15%, against the 20% level at which the position would be resized. It sits within that level.
Falsifiable and fundamental — not one of them is a price condition.
On approach to the $315.00 target the case is reviewed rather than added to; a target reached is a reason to re-examine the position, not to hold it by default. The position is trimmed once forward expected return falls below 0% net of costs, because the capital has a better use elsewhere in the book.
| Criteria | Status | Investment meaning |
|---|---|---|
| Quality | Met | Is the business worth owning under its declared economic type? |
| Valuation | Met | Is the operating path required by today's price achievable? |
| Liquidity | Met | Can the intended position be built and exited in the right vehicle? |
| Downside | Not determined | What is the realistic permanent-loss case? Not established on the evidence on file. |
| Momentum | Not determined | Does price action support or complicate entry timing? Not established on the evidence on file. |
| Catalyst | Not determined | Is there a dated event that resolves the disagreement? Not established on the evidence on file. |
| Consensus | Not determined | Is the house-versus-Street disagreement identified and quantified? Not established on the evidence on file. |
Quality, valuation and liquidity can prevent a position on their own. The remaining four inform timing, sizing and monitoring, and never reject an investment by themselves.
The strongest case for mispricing is that the business already delivers +26.0 percentage points more growth than the price requires. The most important unresolved uncertainty is whether the operating record is long enough to constrain the terminal value at all. The next evidence that should change the portfolio decision is the next scheduled results, or a daily close below $222.29, which forces an immediate review.