Adobe, Birkenstock Added to Deutsche Bank's Top Picks List

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Published July 02, 2024
04:13 PM EDT
Adobe's headquarters building in San Jose, California.

David Paul Morris / Bloomberg / Getty Images

Key Takeaways

  • Adobe and Birkenstock were among the stocks added to Deutsche Bank's quarterly "Fresh Money" list of stocks about which its analysts are most bullish.
  • Adobe, according to the analysts, is poised to increase adoption of AI offerings and see recurring revenue return to growth in the second half after two quarters of decline.
  • DB analyst Krisztina Katai said that Birkenstock's industry-leading margins and room for expansion position the shoemaker to take market share while maintaining profitability.

Deutsche Bank updated its “Fresh Money List” for the third quarter on Tuesday, with Adobe (ADBE) and Birkenstock (BIRK) among the names added to its list of top analyst picks. 

“Adobe looks well-positioned to carry its momentum into" the second half, analyst Brad Zelnick wrote. Zelnick saw evidence in Adobe’s latest quarterly results that the design software firm has experienced some success monetizing generative AI after doubts about that weighed on the stock early in the year.

Adobe Revenue Fall Projected To Turn Around

The company’s net new annual recurring revenue (NNARR), which has declined over the last two quarters, is expected to return to growth in the second half “as pricing headwinds invert, new products become generally available, and enterprise adoption of Firefly,” Adobe’s generative AI offering, rises.

Birkenstock was another fresh face on Deutsche Bank’s list. “We believe the market still under-appreciates BIRK’s industry-leading margins, which combined with the company's long-runway for top-line growth, deserves a premium valuation,” wrote analyst Krisztina Katai. 

The company is poised to increase revenue through product innovation, expansion into new retail outlets, and rising brand awareness in markets around the world, Katai wrote. Plus, the company’s control over its production and supply chain, as well as a shift toward higher-priced silhouettes and styles, should allow its revenue growth to boost profits, she wrote.

Other Additions to Top Analyst Picks

Other additions to the list included Caesars Entertainment (CZR), Corpay (CPAY), Synchrony Financial (SYF), and Uber (UBER). Amazon (AMZN), Chipotle (CMG), Delta Air Lines (DAL), and Merck (MRK) were among the carryovers from the second-quarter list. 

Since its inception in the third quarter of 2017, the Deutsche Bank Fresh Money portfolio has returned about 170%, a bit higher than the the S&P 500’s 160% return in that time period, the firm said.

It has slightly underperformed in the last 12 months, returning about 18% versus the S&P 500’s return of about 23% as of Tuesday afternoon.

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  1. Deutsche Bank Research. “The DB Fresh Money List, 3Q 2024.”

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