Adobe stock holds steady as JMP maintains Market Perform rating

JMP Securities reiterated its Market Perform rating on Adobe (NASDAQ:ADBE), a prominent player in the software industry with an impressive 89.15% gross profit margin, following the company’s fiscal second-quarter 2025 results that exceeded most analyst expectations. The stock dipped approximately 1% in after-hours trading Thursday. According to InvestingPro analysis, Adobe currently appears undervalued based on its Fair Value estimates.

Adobe reported non-GAAP earnings per share of $5.06, surpassing the consensus estimate of $4.96. The company achieved revenue of $5.87 billion, above the $5.79 billion consensus, representing 11% year-over-year growth both in reported figures and constant currency. This performance aligns with Adobe’s strong financial health score of GOOD from InvestingPro, which highlights the company’s robust return on equity of 47%.

The Digital Media segment maintained its 11% revenue growth rate from the previous quarter, while the Digital Experience segment improved to 10% growth from 9% in the prior quarter. Adobe also reported better-than-expected net new Digital Media annual recurring revenue of $460 million, exceeding the consensus estimate of $430 million.

Adobe’s remaining performance obligations reached $19.69 billion, slightly below the consensus of $19.79 billion, growing 10% year-over-year but decelerating from 12% growth in the previous quarter. Free cash flow came in at $2.14 billion, above the consensus estimate of $2.09 billion.

The software company’s shares had fallen 7% year-to-date through Thursday, underperforming compared to the S&P 500’s 3% increase and the Russell 3000’s 2% gain during the same period.

In other recent news, Adobe has reported strong financial results for the second quarter of fiscal year 2025, surpassing analysts’ expectations. The company achieved revenue of $5.87 billion, marking an 11% increase year-over-year, and reported non-GAAP earnings per share of $5.06, exceeding the anticipated $4.97. Adobe’s Digital Media segment saw significant growth, with net new annual recurring revenue reaching $460 million, surpassing Street expectations of approximately $422 million. Following these results, DA Davidson raised its price target for Adobe to $500, citing increased pipeline visibility and confidence in Adobe’s AI contributions. Evercore ISI maintained its Outperform rating and a $475 price target, noting Adobe’s strong performance in its Creative Cloud subscription revenue. Meanwhile, Stifel lowered its price target to $480 but maintained a Buy rating, recognizing Adobe’s progress in its AI initiatives and positive developments in its Business Pro + Consumer segment. These recent developments highlight Adobe’s ongoing efforts to integrate AI across its product suite, driving both adoption and monetization.

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