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Adobe (ADBE) Completes Magento Buyout, Expands Market Share

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Adobe Systems (ADBE - Free Report) has completed the buyout of cloud-based e-commerce content management system (CMS) software provider Magento Commerce.

Magento Commerce offers software for developing and operating web stores, as well as handling online purchases, shipping and returns.

With the completion of the acquisition, Magento Commerce Cloud will now be integrated into Adobe Experience Cloud, a suite of digital marketing services that include advertising and analytics tools. Mark Lavelle will lead the Magento Commerce Cloud business and report to Brad Rencher, executive vice president and general manager of Adobe’s Digital Experience business unit.

Coming to price performance, shares have returned 81.46% in a year, outperforming the industry’s rally of 26.87%.

Deal Benefits

The deal will help Adobe address the needs of both B2B and B2C customers globally and in varied industries. Moreover, Magento has a strong clientele that will further increase the customer base of Adobe. Magento’s partner ecosystem provides pre-built extensions, including payment, shipping, tax and logistics, giving enough flexibility to businesses.

Moreover, the acquisition increases Adobe’s total addressable market (TAM) by an estimated $13 billion.

In addition, the Magento takeover will improve Adobe’s competitive position in the e-commerce marketing market, which is currently dominated by salesforce.com. Moreover, the buyout strengthens Adobe’s presence in the CMS segment of the e-commerce market and intensifies competition for Shopify.

Zacks Rank and Key Picks

Currently, Adobe carries a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the same industry include Groupon (GRPN - Free Report) , PetMed Express (PETS - Free Report) and Expedia (EXPE - Free Report) . While Groupon sports a Zacks Rank #1, PetMed and Expedia both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Groupon, PetMed and Expedia is currently projected to be 6.5%, 10% and 14.5%, respectively.

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