Rocketman,
"I am a neutral bunny. I'm sitting on April 40 puts and April 50 calls."
You aren't really neutral--you're betting on heavy volatility. Not that you asked for it, but my own sense now is that ADBE will probably move in a range BETWEEN your strikes until expiration, the worst of all possible worlds for your position. Better be careful out there. These analyst upgrades--at least Alex Brown's--can only be predicated on looking ahead to the application upgrade cycle to begin soon. You may recall that ADBE tanked late last summer after a decent report because of a lot of downgrades due to their upgrade cycle being over for the time being. Now they are looking forward to the next 6-9 months when it gets started again in earnest, and so are upgrading after a terrible report. These are risky upgrades, for sure, but the market always looks ahead.
A guess about the next year
The biggest potential positive (as well as perhaps the biggest risk, aside from perhaps Postscript revenues continuing to flounder)) over the next year will be the Pagemaker replacement program. It will be entirely new, not backward compatible. It will either be a Quark killer and hugely successful, or a bomb. I don't think it will be an "in between" product. If it is successful (and comes out close to on time, by, say next Febr. or March or so--not a little achievement for this kind of program), then a year or 14 months from now ADBE will be over or near all time highs (mid-70s). If it bombs (or is very late), they will be back in the 30s, or maybe even the 20s if Postscript revenues continue to flounder. Those are the risks, as I see them. |
