Adobe Stock Rally Fueled By Upbeat Analyst Day, Bull Notes

ADBE's analyst day was followed by two price-target hikes

Managing Editor
Oct 16, 2018 at 9:46 AM
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The shares of Adobe Systems Incorporated (NASDAQ:ADBE) are up 7.2% to trade at $255.25 this morning, after the company confirmed at its analyst day its fourth quarter revenue and profit forecast, while expecting 20% revenue growth in 2019. The event drew rave reviews from analysts, with Barclays issuing a price-target hike to $304 from $297. In addition, Cowen and Company hiked its price target to $300 from $295.

Adobe stock climbed to a record high of $277.61 on Sept. 14, but then got caught up in the broad-market pullback. Fresh off a weekly loss of 5.5%, its worst since February 2016, ADBE dropped 4.4% yesterday. However, the shares seem to have found support at their 200-day moving average, and overall the software stock still boasts a 41% lead in 2018. 

Calls have been crazy popular in recent weeks. This is indicated by the 10-day call/put volume ratio of 1.71 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks 1 percentage point from an annual high. Not only does this mean that call buying almost doubled put buying during the past two weeks of trading, but the appetite for bullish bets has been much healthier than usual.

The good news for options traders is that ADBE sports a Schaeffer's Volatility Scorecard (SVS) of 75 out of 100, which shows the stock has tended to make larger-than-expected moves on the charts compared to what the options market had priced in over the past year.

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