David Ricks, a director at Adobe (ADBE), recently bought 2,250 shares. The buy increased his position by 34%, and came to a total cost of $998,946.
This is the first insider buy in over a year, when a company director bought 15 shares for just over $8,500. Otherwise, company insiders have been moderate sellers of shares, with a mix of stock sales and option exercises.
Overall, Adobe insiders own 0.2% of shares.
The design software company is down 30% over the past year, largely on fears of the impact of AI technologies.
However, Adobe has continued to deliver on actual operational performance. Revenues are up 11% over the past year, and earnings have expanded by 20%. Plus, Adobe sports a hefty 25% profit margin.
With a combination of improving earnings and declining share price, Adobe now trades at 21 times earnings, a slight discount to the overall market.
Action to take: Investors should be cautious, given the stock’s decline over the past year. But value investors may want to start accumulating shares here, as software stocks could take the tech lead as chipmakers contend with a shifting market this year.
For traders, shares may push higher in the months ahead, having already started to move off their 52-week low. The April $475 calls, last trading for about $15.50, could see mid-double-digit returns from a further rally in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.