We leverage our regression of software peers to calculate an EV/FCF multiple of ~19x and apply that to ADBE's FY26 FCF of ~$10B to arrive at ~$210B implied enterprise value. We calculate implied equity value per share by adding FY26 net cash, dividing by FY26 FDSO, and discounting back at 12% WACC to arrive at our $430 PT.

The company's revenues are highly dependent on the Creative Cloud product line. Downside risks to our target price include: 1) slowing of growth in Digital Media, as installed base conversion is largely behind the company and incremental new users are flattening out; 2) macro impacts from worsening economic backdrop; and 3) elevated levels of investment in Digital Experience, causing margin expansion to be held back.

Upside risks to our target price include: 1) improved execution in Digital Experience business, including effective integration of acquired Marketo and Magento assets; 2) ongoing price increases driving higher Digital Media ARR and reported revenue; and 3) more success than we assume in emerging markets, education and other underpenetrated Digital Media opportunities.