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Investing.com - RBC Capital has reiterated an Outperform rating on Adobe (NASDAQ:ADBE) with a price target of $430.00, following the company’s recent quarterly performance. The software giant, currently valued at $148.7 billion, is trading near its 52-week low, with InvestingPro analysis suggesting the stock is undervalued.
The software company delivered what RBC described as a "clean beat and raise" in its latest financial results, with particular strength in its artificial intelligence initiatives.
Adobe reached $250 million in AI-first annual recurring revenue (ARR) a quarter ahead of schedule, marking a significant milestone in the company’s GenAI monetization strategy.
The company also expanded its AI-influenced ARR to $5 billion from $3.5 billion in fiscal year 2024, demonstrating growing integration of AI capabilities across its product portfolio.
While RBC noted that questions around GenAI monetization and competition remain in focus for Adobe, the firm suggested that investor sentiment toward the company "may have started to turn a corner." For deeper insights into Adobe’s valuation and 13 additional ProTips, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Adobe reported strong fiscal third-quarter results, with revenue, net new annual recurring revenue, and earnings per share all exceeding expectations. The company achieved non-GAAP earnings per share of $5.31, surpassing the consensus estimate of $5.18, and reached a $250 million annual recurring revenue target for its AI-first products ahead of schedule. Despite these positive results, several analysts have adjusted their price targets for Adobe. Bernstein lowered its price target to $508 while maintaining an Outperform rating, citing moderate AI impact. BofA Securities reduced its target to $460, describing the quarter as a "turning point" with positive growth in core and AI-first offerings. Evercore ISI also lowered its target to $450, highlighting Adobe’s progress in initiatives like Acrobat Studio and Creative Cloud Pro. KeyBanc maintained its Sector Weight rating, acknowledging the early achievement of Adobe’s AI revenue target. Citizens JMP reiterated a Market Perform rating, noting Adobe’s impressive 46.3% operating margin.
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