Shares of creative software company Adobe (ADBE) are down Friday morning after the company’s second-quarter results and outlook received mixed reactions. Indeed, Evercore maintained its Outperform rating with a $475 target, pointing to solid results as revenue and EPS topped expectations and revenue guidance was raised slightly. However, analysts led by five-star-rated Kirk Materne said that Adobe needs to do more to reshape its investment story to attract buyers, especially since Digital Media ARR growth of about 11% signaled that some slowdown was ahead.
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Separately, Morgan Stanley kept an Overweight rating with a $510 price target and saw the quarter as being mostly in line with expectations. Analysts led by five-star-rated Keith Weiss said that Adobe’s AI adoption is improving (Firefly and Acrobat AI subscriptions are rising), but these gains haven’t yet meaningfully boosted overall financial results. As a result, investors are still waiting to see if AI innovation will significantly move the needle for the company.
In addition, Jefferies maintained its Buy rating with a $590 target after calling the quarter solid with a 1% revenue beat, 2% EPS beat, and $460M in net new Digital Media ARR. Analysts led by five-star-rated Brent Thill highlighted the firm’s strong AI progress, with AI generations up 20% quarter-over-quarter and AI ARR on pace to exceed the $250 million target. While AI contributions aren’t yet large enough to drive big changes, Thill said the business is trending positively and management remains confident in achieving double-digit growth.
Is Adobe a Buy, Hold, or Sell?
Overall, analysts have a Moderate Buy consensus rating on ADBE stock based on 19 Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ADBE price target of $519.22 per share implies 34.5% upside potential.
