Credit: Shutterstock photoAdobe ( ADBE ) has around 43% market share in creative software market globally as of 2009. The creative software market includes tools for website designing, printing and desktop publishing, video editing and other multimedia needs. Adobe's competes mainly with Microsoft ( MSFT ), Apple ( AAPL ), Quark and Corel in the creative software market. We expect Adobe's share in this market will continue to be volatile due to its dependence on sales from new software releases and threats from competitors' products.
Adobe's market share trend in this business has been volatile historically. Adobe saw a decline of around 5 percentage points in 2009 in its creative software market share caused by IT budget cuts and reduced advertising budgets by companies. Some of the important products in Adobe's Creative Suite are Photoshop, Dreamweaver, Flash Professional and InDesign.
While we expect Adobe will have share of 41% by the end of Trefis forecast period, Trefis members forecast a higher share level of 51%, indicating a potential upside of 13% to our price estimate for ADBE stock.
We currently have a Trefis price estimate of $37.43 for Adobe's stock , about 12% above the current market price of $33.56.
Sales Growth Dependent on New Version Release Cycles
Historically, Adobe has seen high volume sales growth when a new version of its Creative Suite products is launched. Historically a new version is released approximately after every 18 months.
Adobe's Creative Suite 5 (CS5) was released in May 2010 and has performed well. CS5 has exceeded CS3 sales by 10% in the first two quarters post launch. According to AppleInsider, Adobe is working on CS5.5 and plans to release this prior to the launch of CS6, which it expects will set its Flash and Air technology as a substitute platform for developers seeking for capitalization on the flourishing market for iOS and Android-based mobile phones and tablet apps.
However, competitors pose a threat to Adobe's plans.Quark's QuarkXpress is a market leader in the professional page layout market, though it comes with a high switching cost. Apple has made inroads into the creative video tools market with its product Final Cut Pro, which has become a popular choice in video editing.
Trefis Community Forecast
Trefis members forecast Adobe's creative software market share will increase to above 51% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 43% in 2011 to 41% during the same period. The member estimates imply an upside of 13% to the Trefis price estimate for Adobe's stock.
Our complete analysis for Adobe's stock is here .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
