Adobe price target lowered to $500 from $530 at Oppenheimer

Oppenheimer lowered its price target on Adobe (NASDAQ:ADBE) stock to $500 from $530 on Friday, while maintaining an Outperform rating on the software company’s shares. Currently trading at $413.68, Adobe’s stock remains undervalued according to InvestingPro analysis, with analyst targets ranging from $380 to $630.

The research firm cited "group multiples compression" as the primary reason for the price target reduction, despite Adobe’s second-quarter fiscal results exceeding consensus estimates. The company maintains impressive gross profit margins of 89.25% and has generated $9.2 billion in levered free cash flow over the last twelve months.

Oppenheimer noted several positive factors in Adobe’s performance, including artificial intelligence-derived annual recurring revenue (ARR) that is "ramping and tracking ahead of the 2025 plan," the start of a Creative Cloud pricing cycle, and rising estimates.

The firm acknowledged that bears would continue to point to Adobe’s "decelerating business with only modest net-new Digital Media ARR growth" and a longer timeline for the company to receive "multiples credit for its AI positioning."

Oppenheimer characterized Adobe’s second-quarter results as "mostly consistent with recent quarters," with reported results overcoming "a low guidance bar offset by slowing top-line and margin growth." With revenue growth of 10.63% and a strong financial health score, InvestingPro offers 13 additional key insights about Adobe’s performance and valuation metrics in their comprehensive Pro Research Report.

In other recent news, Adobe reported second-quarter fiscal 2025 earnings that surpassed analyst expectations, with revenue reaching $5.87 billion and earnings per share at $5.06. This performance exceeded the consensus estimates of $5.79 billion in revenue and $4.96 in earnings per share, demonstrating an 11% year-over-year growth. Despite this, Stifel lowered its price target for Adobe to $480 from $525, while maintaining a Buy rating, citing concerns over the company’s consistent outlook for Digital Media annual recurring revenue. In contrast, DA Davidson raised its price target to $500 from $450, acknowledging Adobe’s increased pipeline visibility and successful integration of generative AI across its products. Evercore ISI also maintained its Outperform rating and noted that Adobe’s AI revenue targets are on track, with standalone AI annual recurring revenue expected to surpass the $250 million target by fiscal year-end. Goldman Sachs reiterated its Buy rating, highlighting Adobe’s strong growth in its content supply chain platform and AI-enhanced tools. JMP Securities maintained its Market Perform rating, noting Adobe’s solid revenue growth in both Digital Media and Digital Experience segments. These developments reflect Adobe’s strategic focus on AI and digital media, driving its growth and market position.

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