Adobe price target lowered to $480 from $525 at Stifel

Stifel lowered its price target on Adobe (NASDAQ:ADBE) stock to $480 from $525 on Thursday while maintaining a Buy rating on the shares. The software giant, with its impressive 89% gross profit margins and $176 billion market cap, continues to demonstrate strong financial health according to InvestingPro metrics.

The price target reduction comes despite Adobe shares settling down 1.5% following its latest earnings report. Stifel noted that investors appeared concerned about the company’s consistent outlook for Digital Media ARR, even though Adobe beat quarterly expectations. With revenue growing at 10.5% year-over-year and maintaining a healthy P/E ratio of 27.2x, InvestingPro analysis suggests the stock is currently undervalued relative to its Fair Value.

The firm 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.

Adobe also disclosed that its standalone AI annual recurring revenue is tracking ahead of its $250 million end-of-year target. Stifel interpreted this as a positive indicator of Adobe’s ability to drive adoption and monetization across various generative AI tools and packages.

The company’s efforts to improve its Express product and market awareness appear to be strengthening Adobe’s position in what Stifel described as a "noisy non-Professional competitive environment."

In other recent news, Adobe reported strong financial results for the second quarter of fiscal year 2025, with revenue reaching $5.87 billion, an 11% increase year-over-year. The company’s earnings per share (EPS) also exceeded expectations, coming in at $5.06 compared to the forecasted $4.97. Adobe’s Digital Media net new annual recurring revenue surpassed expectations, reaching $460 million, while Digital Experience subscription revenue grew by 11% year-over-year. DA Davidson raised its price target for Adobe to $500 from $450, maintaining a Buy rating due to the company’s better-than-expected results and promising outlook for AI contributions. Evercore ISI reiterated its Outperform rating and a $475 price target, noting Adobe’s AI revenue targets are on track. Despite these positive outcomes, Evercore expects Adobe shares to remain range-bound in the near term. Adobe’s leadership highlighted the company’s continued focus on AI-driven growth and innovation across its product suite.

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