Street Calls of the Week
Investing.com - UBS lowered its price target on Adobe (NASDAQ:ADBE) to $375.00 from $400.00 on Friday, while maintaining a Neutral rating on the software company’s stock. The stock currently trades at $347.80, near its 52-week low, though InvestingPro analysis suggests the stock may be undervalued at current levels.
The price target reduction follows Adobe’s third-quarter financial results, which UBS described as "roughly in-line" with expectations. The company maintains impressive gross profit margins of 89.14% and achieved 10.67% revenue growth over the last twelve months. Adobe reached its artificial intelligence annual recurring revenue (ARR) target one quarter ahead of schedule.
UBS noted that Adobe slightly increased its full-year guidance for ARR, revenue, and earnings per share (EPS). The firm suggested this might provide "modest relief" for investors concerned about potential disruption risks from artificial intelligence.
The investment bank pointed out that while Adobe achieved its AI targets early, any disruption risk from artificial intelligence was unlikely to materialize in the near term. UBS attributed Adobe’s performance to what it called a "conservative" second-half guidance.
At a calendar year 2026 estimated free cash flow multiple of approximately 14.5x, UBS indicated it doesn’t see "material downside risk" for Adobe shares, but maintained its Neutral stance pending a "more material catalyst" for the stock. For deeper insights into Adobe’s valuation and 12+ additional exclusive tips, visit InvestingPro, where you’ll find comprehensive analysis and the detailed Pro Research Report.
In other recent news, Adobe reported a 10% year-over-year revenue growth for the third quarter, slightly surpassing TD Cowen’s expectations. Despite the positive revenue figures, TD Cowen adjusted its price target for Adobe to $420, maintaining a Hold rating due to growth concerns. Piper Sandler also lowered its price target to $470 from $500, citing a moderation in revenue growth after five quarters of consistent performance. Meanwhile, DA Davidson reiterated its Buy rating on Adobe, maintaining a $500 price target, highlighting Adobe’s outperformance in the most recent quarter. Stifel echoed this sentiment, reaffirming a Buy rating with a $480 price target, and noted Adobe’s better-than-expected quarterly results and its success in surpassing its AI-first annual recurring revenue target ahead of schedule. Oppenheimer also maintained an Outperform rating with a $460 price target, acknowledging Adobe’s strong third-quarter performance and progress in artificial intelligence initiatives. These developments reflect varied analyst perspectives on Adobe’s growth trajectory and financial performance.
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