Adobe stock rises 3% after Goldman Sachs reiterates Buy rating

Investing.com - Adobe (NASDAQ:ADBE) stock rose 3% in after-hours trading after Goldman Sachs reiterated its Buy rating and $570.00 price target on the software company. According to InvestingPro analysis, Adobe appears undervalued at its current market cap of $148.7 billion.

The stock’s positive movement followed Adobe’s outperformance across key metrics, including Digital Media Revenue (exceeding expectations by 2%), Digital Experience Revenue (1% above forecasts), Operating Margin (80 basis points higher), and Free Cash Flow Margin (40 basis points better). The company maintains impressive gross profit margins of 89.25% and has achieved revenue growth of 10.63% over the last twelve months.

Adobe also modestly revised its fiscal 2025 Digital Media Revenue growth guidance upward from 10% to 11%, addressing investor concerns about the durability of the company’s double-digit growth trajectory. Get deeper insights into Adobe’s growth potential and 13 additional exclusive ProTips with an InvestingPro subscription.

Goldman Sachs noted that Adobe’s AI-first Annual Recurring Revenue has already surpassed the company’s $250 million target initially set for fiscal Q4 2025, giving the firm confidence that Adobe can exceed its 11.3% fiscal 2025 Digital Media ARR growth guidance.

The upcoming Adobe MAX conference and Investor Meeting scheduled for October 28 could serve as potential catalysts for the stock, with investors awaiting greater clarity on both AI initiatives and the company’s broader long-term framework.

In other recent news, Adobe Systems Incorporated reported strong financial results for the third quarter of fiscal year 2025. The company achieved a non-GAAP earnings per share (EPS) of $5.31, surpassing analyst expectations of $5.18. Additionally, Adobe’s revenue reached $5.99 billion, exceeding the forecasted $5.91 billion. These results highlight Adobe’s robust performance and significant progress in AI integration. Analyst firms have taken note of these developments, with some expressing positive outlooks on Adobe’s future growth potential. The company’s advancements in artificial intelligence were also a focal point in their earnings call. These recent developments underscore Adobe’s continued momentum in the tech industry.

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