Lo Toney explains why he ‘likes Adobe a lot’

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is a News Reporter at Invezz covering the European, Asian and North America stock markets. Wajeeh has 5… read more.
on Apr 6, 2022
  • Plexo Capital's Toney makes a bull case for Adobe on CNBC's 'TechCheck'.
  • The Wall Street has an average price target of $570 a share on the stock.
  • Adobe shares are down about 35% from their high in late November 2021.

It’s not the time to see “tech” as a group, but to be selective when shopping for stocks in this sector, says Plexo Capital’s Lo Toney. A name he recommends is Adobe Inc (NASDAQ: ADBE).

Toney makes a bull case for Adobe

Toney dubs Adobe down 35% from its high in late November 2021 an attractive buy in terms of valuation. He’s convinced the stock has what it takes to survive the current macroeconomic environment. On CNBC’s “TechCheck”, he said:

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We select companies with solid predictable growth and great cash flow. One of those is Adobe. They’ve got a clean balance sheet; had almost $7.0 billion in FCF last year, and 90% of their revenue is recurring and extremely predictable. So, we really like Adobe a lot.

Last month, Adobe reported market-beating results for its fiscal Q1 but offered tepid guidance for the future, citing the ongoing war in Ukraine.

Another reason to own Adobe Inc

The founding and managing partner of Plexo Capital also likes Adobe for its role in the creator economy – a market worth more than $20 billion at present. He added:

I like to think of Adobe as the one to not only serve small businesses but also individuals; the creator economy at large. Adobe, arguably, was the first pure-play to be able to benefit from this trend. It’s a market growing at over 30% a year.

The Wall Street has an average price target of $570 on ADBE that represents a 30% upside from here. The stock trades at a PE multiple of 44.08.

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