Adobe Missteps | Pushpay 

16 September 2022

US markets (S&P 500 Index -1.1%) dropped in choppy trading on Thursday. The market is still trying to find its footing after a surprise increase in August’s CPI report sparked the worst day of trading in 2 years on Tuesday. 

Microsoft (-2.7%), Apple (-1.9%), and Adobe (-16.8%) were the biggest drags on the US markets, with Adobe experiencing its worst trading day in more than a decade.  

Investors were put off by Adobe’s $20 billion deal to acquire the design platform Figma, a bid that represents double the company’s previous valuation in June 2021. Adobe also delivered its fiscal third-quarter results that matched analysts’ estimates. 

European markets (Stoxx 600 Index, -0.6%) fell for the third day, giving up early gains. The decline in Energy (-2.1%) and Tech (-1.8%) stocks were more than enough to overcome the gains in Banking (+1.8%). 

Pushpay (PPH: NZX) 

Pushpay (-10.6%), the church management software company plunged to $1.10 after rumors surfaced that its buyout would not be progressing.  

Pushpay would not confirm or deny the rumor, although noted that they were aware of the market speculation and were abiding by its NZX continuous disclosure obligation. 

A cooperative bid from BGH Capital and Sixth Street Partners for Pushpay was fielded in May, but no definitive agreement was struck. The bid for Pushpay came at a time when the company reported that it had made significant progress on its growth strategy, with its full year revenue increasing from $249m to $322m 

However, PPH has been unable to retain a share price close to its May high of $1.50, and the non-binding bid may be renegotiated lower before a buyout can progress. 

We maintain our BUY rating on Pushpay as the underlying business continues to present an attractive investment opportunity into the giving space at current levels – regardless of any takeover. The stock is profitable for a tech stock, generating a 4.3% free cash flow yield, and is trading on 3x revenue – what we see as reasonable value for established software as a service business with recurring revenue streams.  

Australian & New Zealand Market Movers 

The Australian market (ASX 200 Index, +0.2%) was marginally higher on Thursday. The rallies in Energy (+3.7%) stocks and Financial (+1.1%) stocks helped negate the losses in almost every other sector.  

New Hope (+6.0%), Whitehaven Coal (+4.6%), and Woodside Energy (+4.3%) were some of the best performers on the day. 

The New Zealand market (NZX 50 Index, 0.0%) ended Thursday flat following two days in the red. 

Counter to the rout in Pushpay, Plexure Group (+24.2%) experienced an incredible rally, attributed to the company publicly noting that it has grown its cash reserves from $14 million to $25 million since March. 

Air NZ (+1.5%) stock should be on watch today, after The Australian reported that Virgin Australia and Air NZ have held discussions concerning a merger. 

US markets (S&P 500 Index -1.1%) dropped in choppy trading on Thursday. The market is still trying to find its footing after a surprise increase in August’s CPI report sparked the worst day of trading in 2 years on Tuesday.  Microsoft (-2.7%), Apple (-1.9%), and Adobe (-16.8%) were the biggest drags on the US markets, with Adobe experiencing its worst trading day in more than a decade.  

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