Adobe reported record quarterly results yesterday, beating on earnings (adjusted EPS growth of 23%) and revenues (14% growth). $3.4 billion in quarterly revenue makes a new all-time high for the company. They also forecasted $15.15 billion in revenue for fiscal 2021, which exceeded street expectations and would represent a 17.7% growth rate over 2020 results.

Gross margins improved from 84.9% to 87.5%, while operating margins also improved from 32.4% to 35.5%. Total operating income grew 25%, from $969.12 million to $1.215 billion.

(Click on image to enlarge)

Adobe currently trades about 44x forward earnings (compared to 23x of the S&P 500) but over the last ten years, the company has grown revenues an average of 15% annually on earnings growth of 23.45%. I’d say this company deserves a premium valuation.

The stock price declined by 17.1% in 2019. 17.1% off of recent all-time highs ($536.88) gives us support at $445, which held on two separate occasions last month. If $445 doesn’t hold (the 200-day moving average is creeping up to potentially provide another layer of support), I’ll be looking for a decline in the vicinity of the March highs at $386.75 to $397 (which would match the 26% decline in the stock in 2018).

I sold part of my investment in September for profit-taking purposes, since the stock was up +75% for the year at one point, but would most definitely add to the position on a decline sub $400. Otherwise, it remains a hold. Another solid quarter, with more likely to come. But, like most large-cap growth stocks, the market has likely priced in a lot of good news already.