Adobe Systems (ADBE) and Bed Bath & Beyond (BBBY) Witness Insider Selling, While This Pharmaceutical Company’s CEO Just Bought Shares

Intensifying Insider Selling at Adobe Systems as Stock Trades Near All-Time High

Let’s wrap up our discussion by looking into the insider selling registered at Adobe Systems Incorporated (NASDAQ:ADBE). Co-Chairman John E. Warnock, who co-founded the graphics and publishing software company in 1982, unloaded 5,000 shares on Tuesday at prices that fell between $93.29 and $93.32 per share, all of which were held by the Warnock Family Trust. Mr. Warnock sold an additional 5,000 shares last Thursday at prices ranging between $93.67 and $93.69 per share. After the recent transactions, the Warnock Family Trust continues to own 577,703 shares, while Mr. Warnock holds an additional direct ownership stake of 22,868 shares.

The shares of Adobe Systems are currently trading near their all-time high of $98 reached on March 18, after gaining 23% in the past 12 months. Although activist hedge fund ValueAct Capital, run by Jeffrey Ubben, and corporate insiders have been unloading their Adobe holdings in the past several months, analysts believe that the shares of the cloud-based graphics and publishing software company may yet have more room to run. Specifically, analysts at FBR Capital Markets recently upped their price target on Adobe Systems to $115 from $110 and reiterated their ‘Market Perform’ rating on the stock, estimating that the company will reach revenue growth of more than 20% and earnings per share growth of more than 30% over the next two years. This massive growth is mainly attributable to the company’s transition from a perpetual license pricing model to a subscription-based pricing model, also known as the software-as-a-service model. Adobe Systems is a highly-diversified software company that offers various products and services for creating and managing digital content, while its primary source of growth comes from its Digital Media business called the Creative Cloud. The Creative Cloud is a subscription service that allows customers to download and install up-to-date versions of its multiple products, including Adobe Photoshop, Adobe Illustrator, and Adobe Premiere Pro, among others.

Adobe Systems appears to have a relatively rich valuation at the moment if bearing in mind its forward P/E multiple of 24.6. However, the company’s expected growth seems to justify the somewhat high valuation. The hedge fund sentiment towards the company increased in the final quarter of 2015, with the number of funds bullish on the company climbing to 46 from 42 quarter-over-quarter. Stephen Mandel’s Lone Pine Capital had 4.01 million shares of Adobe Systems Incorporated (NASDAQ:ADBE) in its portfolio at the end of December.

Disclosure: None