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What's in Store for Adobe Systems?

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The tech company is projected to outperform the market at a less-than-average risk.

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The future for Adobe Systems (NASDAQ:ADBE) looks bright.

The company is taking many steps to make it more attractive to consumers. It is integrating a new cloud system (Creative Cloud) that allows business to monitor their progress from anywhere. Even though many tech investors are concerned about the rising competition (from Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) primarily), Adobe is still projected to significantly outperform the market.

Adobe has many things going for it right now. One of them is that the company is not only being projected to outperform the market, but to also do it at a less-than-average risk. Its price-to-sales multiple is very high, which indicates that it is having no trouble getting customers to subscribe to a membership. Even though its revenues and earnings might see a slight dip in the short term, it will be very profitable in the long term.

Adobe has become a company that many have bought into for a couple of reasons: Adobe has been very consistent with high relative price changes, and it is also expected to deliver shrinking bottom lines. Even with all this great news, however, there is a downside.

One major problem facing Adobe now is that it is getting to be a pricey company, with a 25:1 price to earnings ratio.

There is also heavy competition facing Adobe; between Apple and Microsoft alone, there are many products that are neck-to-neck with Adobe's products, including Microsoft's new release of XPS, which compares to Adobe's PDF.

Another recent competitor that has cut into Adobe's profits is WordPress, which allows users to do some of the same functions Adobe provides, without having to purchase the software. This causes Adobe's profits to lag behind. There are too many free websites and apps for Adobe to compete with.

As long as the company can somehow find a way to get through digital marketing by getting in with Facebook (NASDAQ:FB) or Google (NASDAQ:GOOG) (companies that are trying to grow their mobile ads), Adobe's long-term growth potential can be noteworthy.
No positions in stocks mentioned.
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