ADBE
Adobe Inc.
$237.25
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 50.4% below fair value
You pay
$237.25
Bear
$304.02
Fair
$478.35
Bull
$673.97
Bear
$304.02
+28.1%
9% stage 1 growth, 12% discount
Fair
$478.35
+101.6%
16% stage 1 growth, 12% discount
Bull
$673.97
+184.1%
20% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (16% base case)
Terminal Value % of EV
39%
Implied Market Multiple
11.2x
Market is pricing in (growth)
2.7%
vs 15.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $260.12 from 63 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $478.35 per share.
Warnings
Wall Street's average price target is $260.12 (from 63 analysts). Our estimate is 129% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions