# ADBE – DCF (2026-11-10)

Sample run by the Fair Value Coordinator. Method: 5-year explicit FCF forecast + Gordon growth terminal value, cross-checked with the implied terminal FCF multiple.

## Inputs
- Risk-free (10Y UST, 2026-11-10): 4.98%; ERP 5.0%; beta (5Y observed) 1.38 -> cost of equity 11.88%
- Cost of debt: 10Y + 1.0% spread (coordinator assumption), 21% tax -> 4.72% after tax; weights at market cap $92.12B / total debt $6.79B -> **WACC 11.39%**
- Year-1 FCF = consensus FY1 FCF $10.41B (FY ending Nov 30, 2026); TTM FCF $10.59B.
- Growth path (FCF grows with revenue, constant FCF margin): years 2-3 at consensus 3Y revenue CAGR 9.6%, then fades linearly to terminal g by year 5
- Net cash (debt): $-1.15B; shares 389M (market cap / price; basic, not fully diluted)
- Scenarios: bear = 90% of year-1 FCF, half the growth rate, g 2.0%; base = as above, g 2.5%; bull = 110% of year-1 FCF, 1.25x growth, g 3.0%; all at base WACC

## Result (per share, vs close $236.70)
| Bear | Base | Bull |
|---|---|---|
| $271.50 | **$354.27** | $432.94 |

Base-case year 1-5 FCF ($B): 10.4, 11.4, 12.5, 13.4, 14.1. Terminal value is 68% of EV; implied terminal multiple 11.5x year-5 FCF (exit-multiple cross-check).

## Sensitivity (base case, $/share)
| WACC \ g | 2.0% | 2.5% | 3.0% |
|---|---|---|---|
| 10.39% | $380.98 | $400.77 | $423.23 |
| 11.39% | $339.00 | $354.27 | $371.37 |
| 12.39% | $305.13 | $317.22 | $330.58 |

Sources: see data/2026-11-10/ADBE.md