• Adobe (ADBE) is showing renewed momentum, trading above its key moving averages.
• Barchart’s Trend Seeker recently issued a “Buy” signal.
• ADBE stock is up more than 20% in the past month.
• Analysts and investors are moderately bullish, with price targets as high as $575.

Today’s Featured Stock:

Valued at nearly $178 billion, Adobe Systems (ADBE) is one of the largest software companies in the world and its digital media tools like Photoshop are household names. The bulk of its revenue comes from licensing fees, and Adobe also offers technical support and education. 

What I’m Watching:

I found today’s Chart of the Day by using Barchart’s powerful screening functions. I sorted for stocks with the highest technical buy signals, superior current momentum in both strength and direction, and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. ADBE is beginning to check those boxes. Since the Trend Seeker signaled a buy on May 12, the stock has gained 4.57%.

On the chart, you can note that the stock is beginning to trade above all of its daily moving averages and has rising prices on steady volume.

ADBE Price vs. Daily Moving Averages:

Barchart Technical Indicators for Adobe:

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

• Adobe has a 24% weakening technical “Sell” signal.
• The stock closed at $414.03 on May 21, above its 50-day moving average of $379.65.
• ADBE has a Weighted Alpha of -15.65.
• The stock has lost 14.07% over the past year.
• Trend Seeker “Buy” signal intact.
• ADBE is trading above its 20, 50 and 100-day moving averages.
• The stock has made 19 new highs and is up 20.63% in the last month.
• The 14-day Relative Strength Index is at 69.15%.
• The technical support level is at $410.10.

Follow the Fundamentals:

• $178 billion market cap.
• Trailing price-earnings ratio of 26.64x.
• Revenue is projected to grow 9.12% this year and another 9.64% next year.
• Earnings are estimated to increase 10.54% this year and an additional 12.04% next year.

Analyst and Investor Sentiment on Adobe:

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping a stock, it’s hard to make money swimming against the tide.

It looks like not only Wall Street analysts, but also many of the popular investing advisory services, are moderately bullish on this stock.

• Wall Street analysts tracked by Barchart issued 22 “Strong Buy,” one “Moderate Buy,” nine “Hold,” and one “Sell” opinion on the stock. The consensus price target is $502.
• Value Line gives the stock its highest rating with a price target of $486.
• CFRA’s MarketScope gives the stock a “Buy” with a price target of $575.
• MorningStar thinks the stock is 29% undervalued.
• Of the 5,691 individual investors following the stock on Motley Fool, 5,083 think the stock will beat the market, while 608 think it won’t.
• 159,160 investors monitor the stock on Seeking Alpha, which rates the stock a “Hold.”

The Bottom Line:

Adobe Systems, while previously being depressed, currently has momentum and support from both the market and individual investors. Plus, its fundamentals are solid with revenue and earnings growth projected for the next two years.

While not a formal “Buy” recommendation, Adobe’s technical and fundamental strength make it a compelling stock to watch. Volatility and risk management are advised.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.