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Bernstein SocGen Group raised its price target on Adobe (NASDAQ:ADBE) to $530.00 from $525.00 on Monday, while maintaining an Outperform rating on the software company’s shares. The software giant, currently valued at $166.93 billion, has attracted significant analyst attention, with 23 analysts recently revising their earnings estimates upward according to InvestingPro data.
The research firm cited Adobe’s potential to deliver approximately 10% revenue growth in the near term, with possible acceleration driven by artificial intelligence and changes in go-to-market strategy. This projection aligns with Adobe’s current performance, as InvestingPro data shows a 10.63% revenue growth in the last twelve months, supported by impressive gross margins of 89.25%. Bernstein also highlighted expectations for stable to slightly improving margins and significant stock buybacks that could drive mid-teens earnings per share growth.
Bernstein described Adobe as a "show me story" that has evolved into an "explain to me and show me story," noting that recent changes in reporting and limited disclosure around business metrics and AI make it difficult to model future growth trajectory.
The firm’s analysts view Adobe as "an AI winner in enterprise" but indicated they await more clarity around AI monetization and new go-to-market initiatives. Despite raising the price target, Bernstein actually lowered its multiple from 21x to 20.5x to reflect near-term growth uncertainties.
The price target increase comes as Bernstein rolled forward its valuation model by one quarter, with the firm stating that Adobe’s consistent beating of estimates should help the stock, though it "is going to take time" as reflected in the share price. According to InvestingPro’s Fair Value analysis, Adobe currently appears undervalued, with additional insights available in the comprehensive Pro Research Report, which offers deep-dive analysis of this and 1,400+ other US stocks.
In other recent news, Adobe reported first-quarter revenues of $5.87 billion, marking an 11% increase on a constant currency basis, slightly surpassing estimates from TD Cowen. The company also raised its fiscal year 2025 guidance after a second-quarter beat, with the artificial intelligence segment tracking ahead of its annual recurring revenue target. UBS maintained its Neutral rating and $430 price target, noting Adobe’s modestly above-estimate performance and reaffirmation of its full-year annual recurring revenue growth target of 11%. RBC Capital reiterated its Outperform rating and $480 price target, citing Adobe’s solid performance and strategic roadmap progress, despite competition in the generative AI space. BMO Capital also reaffirmed its Outperform rating with a $450 price target, highlighting Adobe’s stronger revenue results amid a challenging economic backdrop. KeyBanc Capital Markets maintained a Sector Weight rating, pointing to optimism about Creative Cloud pricing changes and AI monetization, although it expressed concerns about core growth drivers. These recent developments indicate a mixed yet generally positive outlook from various research firms.
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