RiverPark Is Bullish On Adobe Systems (NASDAQ: ADBE). Should You Be Too?

The RiverPark Large Growth Fund is bullish on Adobe Systems Incorporated (NASDAQ:ADBE). In its Q1 investor letter (you can download a copy here), the fund discussed Adobe, saying that the company is poised to benefit from the growing market for digital advertising solutions. The letter also included the investor’s viewpoint about Amazon – we have already covered it in another article. In this article, our focus is on RiverPark’s comments about Adobe.

So, here is everything that RiverPark said about the creative software provider for design, print, media and web.

Adobe shares continued their recent string of strong performance as the company reported a strong first quarter, exceeding expectations across every important metric. Revenues grew 24% year-over-year to a record $2.1 billion driven by digital media revenue, which grew 28% year-over-year, while the company’s more mature Digital Experience division (formerly Marketing) still grew 16% year-over-year.

The company continued to demonstrate operating leverage as operating margins expanded 570 bps to an impressive 41.9%, which, in turn, contributed to EPS growth of 65% year-over-year.  In addition, the company’s cash balance grew to more than $6.1 billion, the majority of which is held offshore, which, given the new tax law, management intends to deploy more aggressively to both drive future growth as well as accelerate capital returns to shareholders.

We remain bullish on Adobe’s growth opportunities, as the market for digital advertising solutions globally continues to expand and the company’s execution and expense control remain best in class in its industry.

We trimmed our position on strength during the quarter, and ADBE remains a core holding in the portfolio.

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Systems Incorporated (NASDAQ: ADBE) is a popular stock among hedge funds tracked by Insider Monkey. As of the end of 2017, there were 62 funds in our database with positions in the company. Among those funds were Suvretta Capital Management, Asturias Capital, and Junto Capital Management.

If we look at Adobe’s performance on the share market, the stock has been moving upward since the start of the year. Over the past three months, the share price has increased nearly 18%, while the stock has moved up more than 71% over the past 12 months.

Based on ratings of analysts polled by FactSet, ADBE is ‘Overweight’. The consensus average target price of the stock is $246.31. On Friday, ADBE was closed up 0.52% at $238.09.

Investors looking for opportunities in the Computer and Technology space should track Adobe Systems Incorporated (NASDAQ: ADBE). The company has been delivering a solid performing on the stock market, and people who track it strongly believe that the stock will continue this performance in the coming months.

Disclosure: none