Adobe Systems (NASDAQ:ADBE) stock price has been on robust bull-run over the last year, supported by sharp growth in financial numbers combined with its aggressive growth strategies. Its shares hit the all-time high of $258 this week after beating revenue and earnings estimates for the second quarter.

ADBE shares rose 44% since the start of this year, moving the twelve-month rally to 88%. The market analysts are optimistic about the future fundamentals of Adobe Systems; they believe the company’s valuations are fairly valued and the stock has potential to extend the momentum in the following quarters.

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BMO Capital Markets says Adobe is their top pick due to its strong margins and free cash flow generation potential. Stifel analysts are optimistic about its financial numbers, citing continued outperformance trend in the following quarters.

Adobe Systems Second Quarter Record Results Supports Analysts Claims

Adobe Systems generated record revenue and free cash flows in the second quarter of this year. Its revenue grew 24% year over year to a record level of $2.24 billion, driven by substantial revenue growth from the digital media segment.

“Adobe delivers all the capabilities to enable transformative digital experiences, including content creation and management, predictive analytics and commerce,” said Shantanu Narayen, president, and CEO, Adobe.

The company has also been turning robust revenue growth into big profits, thanks to margin improvement across the business. Its second-quarter operating income jumped 39%, and net income rose 77% over the same period last year. Adobe’s operating cash flows were standing close to $1 billion in the second quarter, which is sufficient to cover capital requirements.

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Acquisitions and Share Buybacks Enhances Its Upside Trend

Adobe’s potential to generate significant cash flows allows it to invest significantly in growth opportunities. The company recently announced it would acquire the commerce platform company Magento Commerce for $1.68B. Adobe Systems also closed acquisition with Sayspring last month, which helps Adobe in making it easier for developers to create interactive prototypes for Google Home and Amazon Alexa. The company, on the other hand, has been aggressively reducing its outstanding shares to offer support to earnings per share and share price.

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