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The Adobe logo on the side of the headquarters building.

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Bernstein analyst Mark Moerdler said Adobe stock offers an attractive buying opportunity after its sudden drop this past week.


Adobe

(ticker:


ADBE

) stock has fallen over 20% since the company announced on Sept. 15 it has agreed to buy collaborative product-design-software start-up Figma for $20 billion. The offer comprises half cash and half Adobe stock.

On Thursday, Moerdler reiterated his Outperform rating for Adobe stock, predicting it will generate solid double-digit growth and robust profits over time. However, he cut his price target to $345 from $500, citing rising interest rates and lower valuations for the software industry.

The deal triggered a “selloff that we believe is overblown given the quality of the business, the drivers of the acquisition and opportunities Figma presents to Adobe,” he wrote. “Once the deal closes and Adobe is better positioned to explain future opportunities that Figma creates, we think that [positive] sentiments will return.”

Adobe stock is up slightly to $287.13 in Friday trading.

The analyst said investors are concerned about Figma’s high price, but he noted the acquisition looks more reasonable if investors look at its growth potential. Moerdler also wrote that Adobe has the means to pay for the start-up easily given its financial resources.

“Adobe’s business model is not broken and the acquisition of Figma is both [for] defense and offense,” he wrote.

Write to Tae Kim at tae.kim@barrons.com

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