Evercore reiterates Adobe stock rating as AI revenue targets on track

Published 13/06/2025, 11:06
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Adobe (NASDAQ:ADBE), a prominent player in the software industry with impressive gross profit margins of 89%, reported second-quarter results that exceeded expectations, with revenue reaching $5.87 billion, up 11% year-over-year, and earnings per share of $5.06, ahead of analyst consensus of $4.97. According to InvestingPro, Adobe maintains strong profitability with a return on equity of 47%.

The company’s Digital Media net new annual recurring revenue reached $460 million, surpassing Street expectations of approximately $422 million, while Digital Experience subscription revenue grew about 11% year-over-year, exceeding guidance of roughly 9.5%. This growth aligns with Adobe’s broader revenue trend, which InvestingPro data shows has maintained a robust 14% CAGR over the past five years.

Evercore ISI maintained its Outperform rating and $475.00 price target on Adobe stock, noting that management confirmed its standalone AI annual recurring revenue is on track to exceed the $250 million fiscal year 2025 exit rate target offered at its Analyst Day.

The firm highlighted positive trends including accelerated Creative Cloud subscription revenue over recent quarters and the business professionals and consumers segment showing modest growth acceleration to approximately 15% year-over-year, albeit against easier comparisons.

Despite these positive results, Evercore expects Adobe shares to remain range-bound in the near term as the company reiterated its total Digital Media annual recurring revenue growth target of approximately 11%, which implies some deceleration in the second half despite easier comparisons. Based on InvestingPro’s Fair Value analysis, Adobe currently appears undervalued, with additional insights and detailed valuation metrics available in the Pro Research Report, which offers comprehensive analysis of this and 1,400+ other top US stocks.

In other recent news, Adobe Systems Incorporated reported robust financial results for the second quarter of fiscal year 2025, surpassing analysts’ expectations for both earnings per share and revenue. The company’s non-GAAP EPS reached $5.06, exceeding the anticipated $4.97, while revenue climbed to $5.87 billion, outpacing the forecast of $5.8 billion. This performance marks an 11% year-over-year revenue growth, driven by strong demand in Adobe’s Digital Media and Digital Experience segments. Despite these positive results, Adobe’s stock experienced a slight decline in after-hours trading. The company launched several AI-driven products and expanded its partner ecosystem, aiming for a total revenue target between $23.5 billion and $23.6 billion for the fiscal year 2025. Adobe continues to lead in the creative and marketing technology sectors, benefiting from the expanding market for AI-driven solutions. The company is also on track to surpass $250 million in AI Direct Annual Recurring Revenue, highlighting its commitment to AI-driven growth.

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