Citi cuts Adobe stock price target to $490, keeps neutral stance

Published 10/03/2025, 11:52
© Reuters.

On Monday, Citi analysts, led by Tyler Radke, adjusted their outlook on Adobe stock (NASDAQ:ADBE), reducing the price target from $551.00 to $490.00 while maintaining a Neutral rating. The revision reflects a degree of caution ahead of Adobe’s first fiscal quarter earnings report, citing a softer forecast from CRM and other front-office companies. The valuation of Adobe is perceived as less demanding compared to its large-cap counterparts, though InvestingPro data shows the stock trading at a P/E ratio of 36.2x and maintaining impressive gross profit margins of 89%.

The analysts noted that pricing strategies could play a significant role in Adobe’s growth algorithm this year, especially considering recent price changes to its flagship applications. They also pointed out that weaker Creative Cloud web traffic may indicate ongoing challenges in acquiring paid users. Despite these concerns, Citi chose to uphold a Neutral rating on the stock. According to InvestingPro, Adobe maintains strong financial health with revenue growth of 10.8% and robust cash flows. InvestingPro subscribers have access to 13 additional key insights about Adobe’s financial performance and valuation metrics.

The new price target of $490.00 is based on slightly lowered earnings estimates and a revised valuation regression framework. This change implies a 24.6x enterprise value to free cash flow (EV/FCF) multiple, compared to the 33x multiple commonly seen among large-cap companies.

Adobe’s stock performance is expected to remain within a certain range until the company can demonstrate improved net new annual recurring revenue (NNARR) trends for Creative Cloud and capitalize more effectively on generative AI opportunities. The analysts emphasized the need for Adobe to deliver on these fronts before a more positive reassessment of the stock could be justified.

In other recent news, Adobe has announced the launch of Photoshop for iPhone, expanding its digital imaging suite to mobile devices. This release brings Photoshop’s renowned image editing tools to a new platform, aiming to attract both new and existing users. The app integrates seamlessly with other Adobe creative apps and offers both free and premium features. In the financial realm, Adobe is set to report its first-quarter earnings on March 12, with expectations of modest upside results according to TD Cowen. RBC Capital Markets has adjusted Adobe’s price target to $550, citing market valuation changes, while maintaining an Outperform rating. BMO Capital Markets also retained an Outperform rating with a $515 price target, noting Adobe’s progress towards its fiscal year 2025 revenue goals. Piper Sandler remains optimistic with a $600 price target, despite concerns about AI disruption, and highlights Adobe’s potential for growth in upcoming investor events. These developments underscore Adobe’s strategic focus on enhancing its product offerings and navigating current market conditions.

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