Adobe stock is down over 40% this year, despite an upbeat forecast. Should you buy?
SeanShot

Despite an upbeat forecast and a promising merger on the horizon, Adobe (NASDAQ:ADBE) shares are still down over 40% year-to-date. Is now the time to buy?
Dragged Down by Figma and a Tech Selloff
Shares of the provider of video and photo editing software were hammered in mid-September when the company announced plans to buy collaborative design platform Figma for $20B. The deal, which is reportedly undergoing an antitrust review by the US Department of Justice, is expected to close next year.
The stock began moving higher in October, helped by a relatively positive 2023 forecast, which CEO Shantanu Narayen attributed to "a massive market opportunity that will drive Adobe's next decade of growth."
Adobe's stock performance this year has largely echoed that of other well-known tech names. While it has risen around 6% over the past 30 days, Adobe's stock is down 43% year-to-date and is down roughly 50% from its 52-week high of $699.54 reached on Nov. 22 of last year. The S&P 500 is currently off 18% for 2022.
ADBE hit a 52-week low of $274.73 on Sept. 27, about two weeks after it announced the Figma deal. 
To put ADBE's performance into context, other names in the same general category have suffered similar declines in 2022. Megacap tech names Alphabet (GOOG) (GOOGL) and Microsoft (MSFT) have fallen 34% and 28%, respectively. Elsewhere, enterprise software maker Oracle (ORCL) has benefited from a recent rebound and is now down just 9% since the end of 2021. 
On the other end of the spectrum, ADBE has held up significantly better than virtual document signing software provider DocuSign (DOCU). The one-time pandemic darling has seen its shares plunge more than 70% for 2022.
Is ADBE a Buy?
Seeking Alpha's Quantitative Ratings view Adobe (ADBE) as a lackluster opportunity. As of Nov. 21, the system for grading quantitative measures rates the stock as a Hold.
While Adobe received an A+ for profitability and a B+ for revisions, the Quant Ratings highlighted potential red flags elsewhere. ADBE got a C for momentum, a D+ for growth and a D for valuation.
Most Wall Street analysts have a more upbeat view of the stock, which currently has an average rating of a Buy. This comes despite ongoing debate over the merits of the Figma deal.
Of the 32 analysts tracked by Seeking Alpha, 12 rated Adobe a Strong Buy, 5 a Buy, 15 a Hold and none a sell. SA contributors also rate the stock a buy, on average.
"We believe shares are fairly valued, as Adobe currently trades at Calendar Year 2023E P/E and EV/revenue multiples of 18x and 6.8x, respectively, versus the large-cap technology peer group median multiples of 21x and 4.4x, respectively," wrote JMP analysts, who have a market perform rating on the stock, in a note dated Nov. 7.
Baird analysts said in their Oct. 19 note that they viewed the Figma deal as potentially "transformative" as it would "help accelerate real-time, co-editing to become a reality across the Adobe eco-system" and offered a "significant opportunity to expand workflow solutions for designer/developers."
"While Figma has potential to be a long-term winner, we reiterate our Neutral rating given ongoing macro pressures on Adobe's business and Figma's dilutive impact to margins over the next few years," Baird analysts added.
SA contributor Bradley Guichard said in his analysis on Nov. 13 that he saw Adobe's risk/reward profile as "finally attractive" after being pushed down by the broader tech sell-off and the Figma deal. 
"The last time the stock was this far from high was the financial crisis, and before that, the dot-com crash. The stock recovered as the economy did in both cases," wrote Guichard, adding that the stock could be a "tremendously positive risk/reward proposition for long-term investors." 
Meanwhile, the DOJ's anti-trust review of the Figma deal appears to be gaining traction. The department reportedly sent Adobe a second request for information last week.