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Investing.com - Deutsche Bank maintained its Hold rating and $475.00 price target on Adobe (NASDAQ:ADBE), a $150 billion market cap software giant with impressive 89% gross margins, ahead of the company’s fiscal third-quarter earnings report scheduled for Thursday, September 11.
The bank expects Adobe to deliver stable results against what it describes as a "challenging AI bear narrative" currently affecting application software stocks. Deutsche Bank believes the Street’s expectations for Digital Media net new annual recurring revenue are reasonable given anticipated second-half tailwinds. InvestingPro data shows Adobe maintaining strong financial health with 10.6% revenue growth over the last twelve months.
Adobe implemented global pricing and packaging changes for Creative Cloud all-apps subscriptions effective August 1, which Deutsche Bank estimates will provide approximately $440 million in net new annual recurring revenue benefit between fiscal Q3 2025 and fiscal Q3 2026. The bank believes these changes were already factored into Adobe’s full-year ARR guidance. Notably, InvestingPro analysis reveals 12+ additional key insights about Adobe’s performance and valuation metrics. Get the full picture with the comprehensive Pro Research Report, available exclusively to subscribers.
Deutsche Bank notes that with Adobe no longer breaking out ARR between Creative and Document clouds, investors will likely focus on growth in Creative and Marketing Pros segments. The bank’s recent partner conversations indicated stable Digital Media momentum and increasing interest in GenStudio for Performance Marketing.
Bloomberg Alternative Data suggests stable to slightly improved Digital Media customer trends and slightly less price/mix benefit in fiscal Q3 versus fiscal Q2 for what Deutsche Bank expects is a "more of a down-market cohort."
In other recent news, Adobe is preparing to announce its third-quarter earnings, with several analysts providing their forecasts. RBC Capital has reduced its price target on Adobe to $430 from $480, yet maintains an Outperform rating, expecting solid results. Similarly, Mizuho lowered its price target to $460 from $530 while also keeping an Outperform rating, citing strong enterprise activity but mixed signals overall. UBS has adjusted its price target to $400 from $430, maintaining a Neutral rating due to concerns about AI competition impacting demand for Adobe products. Meanwhile, Rothschild Redburn reiterated a Sell rating with a $280 price target, expressing concerns over Google’s new AI model potentially disrupting Adobe’s Photoshop. TD Cowen has maintained a Hold rating with a $470 price target, noting mixed survey results and softer third-party credit card data. These developments come as Adobe faces both opportunities and challenges in the rapidly evolving tech landscape.
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