Adobe (ADBE.US) pre-market Wall Street divided: JPMorgan and Citigroup clash

Adobe (ADBE.US) will announce its first-quarter 2025 financial results after the market closes on Wednesday (early Thursday in Beijing). Morgan Stanley maintains its "Overweight" rating and a target price of $660, believing that Adobe can integrate GenAI features into its existing user base to enhance user engagement and achieve revenue growth. The bank mentioned in its report that Adobe's GenAI solutions are expected to make significant commercial progress in fiscal 2025, especially in the Creative Cloud and Digital Experience areas. Analysts believe that Adobe Summit will be an important platform for the company to showcase its GenAI technology capabilities and market competitiveness. Management may disclose more about the commercialization path and market opportunities of its GenAI solutions at the conference, which will help boost investors' confidence in the company's future development. The report suggests that Adobe's presentation at the summit may serve as a catalyst for the stock price, especially given the low expectations for Adobe's GenAI business in the current market. Morgan Stanley expects Adobe to achieve total revenue of approximately $23.414 billion in fiscal 2025, up about 8.9% year-on-year. In addition, the company expects its operating margin to remain around 46%, which will support stable profit growth in the next few years. Citi is bearish on Adobe Citi is "slightly cautious" about the company's upcoming first-quarter results, maintaining its "Neutral" rating but lowering its target price to $490. Analyst Tyler Radke said: "We are slightly cautious on Adobe's first-quarter revenue, given the softening outlook for Salesforce and other front-office service companies, though its valuation is less demanding than its large peers. Pricing may still be an important component of Adobe's growth (algorithm) this year, as recent updates to its flagship apps and a softening of Creative Cloud network traffic may suggest that paid user acquisition remains challenging."