By Sam Boughedda
UBS told investors in a note on Thursday that the Street is too negative on Adobe Systems' (NASDAQ:ADBE) deal to acquire Figma.
"We conclude that the Street has likely swung too negative about the strategic merits of the Figma deal and even the purchase price," wrote the analysts.
Adobe shares are down 23% since the Figma acquisition was announced in mid-September as "the Street reaction was severe and negative about what the $20 billion price tag implies about the health of Adobe’s stand-alone Creative business," the analysts added. UBS currently has a Neutral rating and a $320 12-month price target on Adobe stock.
They explained that the firm had spent the last few weeks speaking with 15 Figma and Adobe customers, partners, and former employees to better assess the deal, and while they have "leaned cautious" on the stock all year, they now conclude that the downside risk is now far more modest.
"Our checks were quite bullish about the long-term growth potential of UX design tool spending in general and Figma in particular. Adobe’s move to acquire Figma may have been partly defensive, but could have been more offensive (buying into a material growth vector that it had missed) than most investors appreciate," the analysts explained.