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On Wednesday, BofA Securities expressed continued confidence in Adobe (NASDAQ: NASDAQ:ADBE), maintaining a Buy rating and a price target of $528.00. Following attendance at Adobe’s analyst day at the Adobe Summit in Las Vegas, BofA Securities highlighted several positive developments, although no financial targets were provided to support the company’s momentum with its top-of-funnel efforts, monetization, and AI offerings. According to InvestingPro data, Adobe maintains impressive gross profit margins of 89.15% and has demonstrated solid revenue growth of 10.54% over the last twelve months, suggesting strong operational efficiency.
The analyst noted that Adobe’s Acrobat product has reached 650 million monthly active users (MAUs), a robust increase of 23%, spurred by the adoption of new features such as the AI Assistant. This growth in Acrobat’s user base is seen as a positive indicator for potential similar success across Adobe’s creative franchises, which include tools such as Image2, Vector 4, Video 2, and 3D, all with over 100 million MAUs. With a market capitalization of $170.26 billion and an overall financial health rating of "GOOD" from InvestingPro, Adobe continues to demonstrate its strength as a prominent player in the software industry.
Adobe’s AI-influenced revenue, which exceeds $3.5 billion, is significantly higher than the $125 million directly attributed to AI monetization. The company is experiencing momentum in upsell and cross-sell strategies, with products like Premiere Pro and Creative Cloud (CC) Apps. The analyst pointed out that with Adobe’s stock trading at 17 times its calendar year 2026 free cash flow (FCF) or 1.2 times its 14% two-year compound annual growth rate (CAGR)—a discount compared to the 1.4x average of the large-cap group—market expectations for growth reacceleration appear modest. InvestingPro analysis suggests Adobe is currently undervalued, trading at a P/E ratio of 25.77x with strong fundamentals and multiple growth catalysts ahead.
Furthermore, BofA Securities sees potential for improved monetization moving forward, driven by an expanding array of integrated AI and top-of-funnel offerings, as well as agentic offerings included in Adobe’s digital experience marketing suite. Data from BofA’s February Cloud Views report indicates growing engagement with Adobe’s Firefly feature, with 6 million engaged visits, an increase from the previous monthly level of 4.5 million.
In conclusion, BofA Securities reaffirmed their Buy rating and price target for Adobe, suggesting that the company’s strategic focus on AI and digital marketing offerings could lead to further growth and monetization opportunities.
In other recent news, Adobe has been actively unveiling new developments and strategic initiatives. The company announced the private preview of its Adobe Marketing Agent and the continued development of Adobe Express Agent for Microsoft (NASDAQ:MSFT) 365 Copilot, highlighting its collaboration with Microsoft to integrate generative AI into workplace applications. These tools are designed to enhance marketing capabilities by refining audience targeting and streamlining work management processes within Microsoft applications. Additionally, Adobe’s collaboration with LinkedIn Ads and Microsoft Advertising is expanding, offering new avenues for asset creation in marketing campaigns.
Financially, Adobe’s AI initiatives have contributed to a $125 million in AI standalone Annual Recurring Revenue as of the end of the first quarter of 2025. Analyst firms have weighed in with varying perspectives on Adobe’s stock. Piper Sandler maintains an Overweight rating with a $600 target, citing Adobe’s solid product trajectory and consistent subscription growth. In contrast, KeyBanc Capital Markets holds an Underweight rating with a $390 target, noting that while Adobe’s AI developments are promising, the financial impact may need to grow to significantly influence investor sentiment.
Meanwhile, Stifel continues to support Adobe with a Buy rating and a $525 target, emphasizing the company’s focus on user acquisition and the potential revenue upside from new AI solutions and pricing models. These recent developments and analyst assessments indicate a dynamic period for Adobe as it navigates the integration of AI technologies and strategic partnerships to drive growth.
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