As of June 4, 2025, Adobe Inc has a Discounted Cash Flow (DCF) derived fair value of $418.47 per share. With the current market price at $412.49, this represents a potential upside of 1.4%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $346.20 |
| DCF Fair Value (10-year) | $418.47 |
| Potential Upside (5-year) | -16.1% |
| Potential Upside (10-year) | 1.4% |
| Discount Rate (WACC) | 7.1% - 10.3% |
Revenue is projected to grow from $21505 million in 11-2024 to $49869 million by 11-2034, representing a compound annual growth rate of approximately 8.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 11-2024 | 21505 | 11% |
| 11-2025 | 23713 | 10% |
| 11-2026 | 26717 | 13% |
| 11-2027 | 29160 | 9% |
| 11-2028 | 31765 | 9% |
| 11-2029 | 34863 | 10% |
| 11-2030 | 38168 | 9% |
| 11-2031 | 40076 | 5% |
| 11-2032 | 44005 | 10% |
| 11-2033 | 45998 | 5% |
| 11-2034 | 49869 | 8% |
Net profit margin is expected to improve from 26% in 11-2024 to 28% by 11-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 11-2024 | 5560 | 26% |
| 11-2025 | 6205 | 26% |
| 11-2026 | 7102 | 27% |
| 11-2027 | 7867 | 27% |
| 11-2028 | 8689 | 27% |
| 11-2029 | 9661 | 28% |
| 11-2030 | 10602 | 28% |
| 11-2031 | 11159 | 28% |
| 11-2032 | 12283 | 28% |
| 11-2033 | 12869 | 28% |
| 11-2034 | 13985 | 28% |
with a 5-year average of $350 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 11-2025 | 368 |
| 11-2026 | 412 |
| 11-2027 | 449 |
| 11-2028 | 512 |
| 11-2029 | 624 |
| 11-2030 | 686 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 43 |
| Days Inventory | 0 |
| Days Payables | 56 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 5948 | 1175 | 380 | 336 | 4057 |
| 2026 | 9073 | 1794 | 571 | 298 | 6410 |
| 2027 | 10045 | 1987 | 623 | 197 | 7238 |
| 2028 | 11116 | 2195 | 678 | 345 | 7897 |
| 2029 | 12417 | 2440 | 744 | 322 | 8911 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 346.20 | -16.1% |
| 10-Year DCF (Growth) | 418.47 | 1.4% |
| 5-Year DCF (EBITDA) | 652.49 | 58.2% |
| 10-Year DCF (EBITDA) | 718.04 | 74.1% |
Is Adobe Inc (ADBE) a buy or a sell? Adobe Inc is definitely a buy. Based on our DCF analysis, Adobe Inc (ADBE) appears to be slightly undervalued with upside potential of 1.4%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a hold with potential to accumulate at the current market price of $412.49.