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Cabot Undervalued Stocks Advisor Special Bulletin

This software company that’s changing the world through digital experiences moves from Hold to Buy.

Today’s news: Adobe Systems (ADBE) moves from Hold to Buy.

Adobe Systems (ADBE) is a software company that’s changing the world through digital experiences. Today at Adobe MAX, the world’s largest creativity conference, Adobe announced the next generation of Creative Cloud—a release of faster and more powerful products spanning multiple surfaces. The company officially launched Adobe Photoshop on iPad and extended Adobe Fresco to Microsoft Surface, while also previewing the highly anticipated Adobe Illustrator on iPad and the all-new Photoshop Camera. Adobe also released major updates to Lightroom, Premiere Pro, After Effects, InDesign and Adobe XD. Details are available in the press release.

Adobe will host an analyst meeting tonight in which the company intends to outline revenue, margin and earnings targets for 2020. The stock is undervalued vs. its historical P/E, so even moderately good news at the analyst meeting could spark a good amount of buying activity.

Adobe is a large-cap aggressive growth stock. Analysts expect EPS to increase by 42.5% in 2019 and 23.7% in 2020 (November year-end), and the 2020 P/E is 29. This is a great stock for risk-tolerant growth investors and buy-and-hold equity portfolios. I’m moving ADBE from Hold to a Buy recommendation, now that the price chart is improving, with the stock now rising above its 50- and 200-day moving averages. I’m delivering this Buy recommendation today, because I think it’s likely that the stock will react quickly and positively to the Adobe MAX conference and analyst meeting. Buy.