Fresh Highs for Adobe Stock After Upgrade

Morgan Stanley's new price target is the highest on Wall Street

Managing Editor
Apr 29, 2019 at 9:51 AM
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The shares of Adobe Inc (NASDAQ:ADBE) are up 2.9% to trade at $290.23, and earlier tapped a fresh record high of $290.46. This comes after Morgan Stanley upped its rating on the software name to "overweight" from "equal weight," while boosting its price target to $340 from $282, the highest on Wall Street. Analyst Keith Weiss waxed optimistically on the company's Digital Experience growth. 

It's been a steady climb up the charts for Adobe stock. Since a Christmas Eve bottom just below $205, ADBE has added 41%, carving out a channel of higher highs guided by its ascending 40-day moving average. Plus, the equity has only turned in four weekly losses in 2019.

Analysts have been hesitant to jump on board, though. Of the 22 brokerages covering the security, 10 still rate it a tepid "hold," while the consensus 12-month price target of $295.38 was a slim 4.8% premium to Friday's closing perch of $281.96.  

In the options pits, puts have risen in popularity. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows ADBE with a 10-day put/call volume ratio of 1.26. Plus, the ratio ranks in the 100th percentile of its annual range, showing unusual demand for long puts over calls in recent weeks.

Regardless of direction, options look to be an ideal vehicle to bet on ADBE, with the security's Schaeffer's Volatility Index (SVI) of 21% ranking in the 12th percentile of its annual range. And according to Schaeffer's Senior Quantitative Analyst Rocky White, in the four other times since 2008 Adobe has been trading within 2% of a new 52-week high while its SVI was ranked in the lower 20% of its annual range, the shares averaged a one-month gain of 6.6%.

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