For his second "Executive Decision" segment of Tuesday's Mad Money program, Jim Cramer spoke with Shantanu Narayen, president and CEO of Adobe (ADBE) , which just delivered a three-cents-per-share earnings beat.
Narayen explained that Adobe's vision is to allow companies to engage directly with their customers. Throughout the pandemic, companies have been creating more content and documents with Acrobat and expanding their digital presence with increased digital commerce, he said, all of which plays to Adobe's strengths.
When it comes to enterprise software companies, there are very few players that offer business and consumer products, Narayen added, but Adobe has a strong presence in both areas. That's why they have many A-list companies as customers, including Walmart (WMT) and PayPal (PYPL) .
As companies make their digital transformations, they need a playbook for success and Adobe provides them with that roadmap.
In out last look at ADBE back on June 18, we wrote that traders should "Continue to hold longs that have been recommended in earlier reviews. Stops could be raised to $525 from $510."
In this updated daily bar chart of ADBE, below, we can see that prices really soared from June to early September. Prices continue to trade above the rising 50-day moving average line and above the rising 200-day line. Prices are only $110 above the 200-day line so I would not consider ADBE extended or overbought when compared to this long-term trend indicator.
The On-Balance-Volume (OBV) line has been moving sideways since early July. This suggests a balance between bulls and bears. The Moving Average Convergence Divergence (MACD) oscillator is still above the zero line but has been weakening since early July.
In this weekly Japanese candlestick chart of ADBE, below, we can see the past three years of activity. Prices made a base around $270 in 2019 and prices more than doubled. A triple from the base would give us $810 as a potential long-term price objective. I do not see a top reversal pattern and prices remain strong above the rising 40-week moving average line.
The weekly OBV line has advanced since March but has yet to make a new high. Soon perhaps. The weekly MACD oscillator is well above the zero line but is showing some narrowing.
In this daily Point and Figure chart of ADBE, below, we can see a potential downside price target in the $607 area.
In this weekly Point and Figure chart of ADBE, below, we see our $724 price target again.
Bottom line strategy: Traders should continue to hold longs recommended back in June. The gains are a game changer. Traders could raise stops to $619 from $525 while investors could raise stops to $599. The $724 area is our first price target and then the $810 is possible if the broad market has a year-end "melt up".