Stifel cuts Adobe target price to $480 from $525

Stifel cuts Adobe target price to $480 from $525

Stifel Financial has lowered its price target for Adobe Inc. (NASDAQ: ADBE) stock from $525 to $480, maintaining a Buy rating on the shares. The adjustment comes despite Adobe's impressive financial performance, including a 10.5% year-over-year (YoY) revenue growth and a healthy profit margin of 89%. Stifel's decision is based on concerns about Adobe's Digital Media ARR outlook, which has been a focus for investors [2].

Adobe's latest earnings report showed strong financial health, with revenue reaching $5.87 billion, an 11% YoY increase. The company's earnings per share (EPS) exceeded expectations, coming in at $5.06 compared to the forecasted $4.97. Despite these positive results, Stifel noted that investors remain cautious about the company's Digital Media ARR outlook [2].

Stifel highlighted positive developments in Adobe's Business Pro + Consumer segment, which includes Express and Acrobat products. This segment accelerated by approximately one percentage point quarter-over-quarter after at least five quarters of deceleration, which Stifel views as an encouraging sign [2].

Adobe also disclosed that its standalone AI annual recurring revenue is tracking ahead of its $250 million end-of-year target, indicating strong adoption and monetization of its generative AI tools and packages [2].

Despite the price target reduction, Stifel believes that Adobe's focus on AI-driven growth and innovation across its product suite remains a strong driver for the company's future performance. The firm expects Adobe shares to remain range-bound in the near term, with a potential upside driven by continued innovation and market awareness efforts [2].

References:
[1] https://www.marketscreener.com/quote/stock/ADOBE-INC-190252028/news-broker-research/
[2] https://www.investing.com/news/analyst-ratings/adobe-price-target-lowered-to-480-from-525-at-stifel-93CH-4094598