Software giant Adobe (ADBE) is a leader in its industry, and its stock is starting to reflect that status. On Sept. 27, Adobe stock dropped to a 274.73 low amid the 2022 bear market and a weak software market. It’s up about 32% from that low and climbing. On Monday the IBD Relative Strength Rating for Adobe stock rose to 73, up from 67.
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The raised 73 RS Rating for Adobe stock means it’s bested 73% of all stocks for price performance this past year. That’s an OK rating. However, the other key ratings for the maker of design, imaging and publishing software are outstanding. Market research demonstrates that the best stocks to buy and watch often have an RS Rating north of 80 in the early stages of their moves. See if Adobe can continue to rebound and clear that threshold.
Among its other significant ratings, Adobe stock has a powerful 95 Composite Rating out of 99. Its Earnings Per Share Rating is elevated too, at 94, putting it in the top 6% of stocks for earnings growth for the past three years with, emphasis on recent quarters. Additionally, its A- Accumulation/Distribution Rating, on an A+ to E scale shows that institutional investors like ETFs and mutual funds are fairly heavy buyers.
On March 15, San Jose, Calif.-based Adobe reported $4.66 billion in its fiscal first quarter 2023, which is a 9% year-over-year rise, or 13% in constant currency. Diluted earnings per share was $2.71 on a GAAP basis. And it was $3.80 on a non-GAAP basis, up from $3.37 the same quarter last year.
“Adobe drove record Q1 revenue and we are raising our annual targets based on the tremendous market opportunity and continued confidence in our execution,” said Shantanu Narayen, Adobe chairman and CEO, in the Q1 earnings release.
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Adobe stock recently rose above both its 50-day and 200-day lines. Additionally its relative strength line, which compares a stock’s performance vs. the S&P 500, is near the highest point in six months. Adobe is not currently offering a proper buying opportunity. See if the stock goes on to form a base that could ignite a fresh run.
The company holds the No. 2 rank among its peers in the Computer Software-Desktop industry group. PagerDuty (ADBE), whose software collects signals from other software systems, and operating systems giant Microsoft (MSFT) are also among the group’s highest-rated stocks.
Please follow James DeTar on Twitter @JimDeTar
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