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Investing.com - Stifel has reiterated its Buy rating on Adobe (NASDAQ:ADBE) stock with a price target of $480.00, following the company’s better-than-expected quarterly results. The software giant, currently valued at $148.7 billion, maintains impressive gross profit margins of 89% and has demonstrated solid revenue growth of nearly 11% over the last twelve months.
The software giant beat Wall Street estimates across all metrics and raised its guidance, with particular emphasis on its Digital Media Annual Recurring Revenue (ARR) growth outlook. Adobe has already exceeded its year-end AI-first ARR target of $250 million a quarter ahead of schedule. According to InvestingPro analysis, Adobe’s current valuation suggests the stock may be trading below its Fair Value, with strong financial health indicators supporting its growth trajectory.
Stifel attributed Adobe’s strong performance to several factors, including artificial intelligence initiatives, pricing strategies, and encouraging metrics around net user additions despite long-term seat count concerns. The research firm believes Adobe has made a compelling case for its position as "the operating system for creative work in the future." InvestingPro subscribers can access 12 additional key insights about Adobe’s market position and financial strength through the platform’s comprehensive Pro Research Report.
The company is showing signs of stabilization and growth in its core business, with AI proliferation and pricing benefits expected to drive continued subscription growth in the near double-digits as 2025 ends and into 2026.
Adobe’s upcoming MAX event in October represents another opportunity to improve what Stifel describes as "negatively skewed sentiment" surrounding the company.
In other recent news, Adobe reported a strong fiscal third-quarter performance, surpassing expectations in revenue, net new annual recurring revenue, and earnings per share. The company also raised its fiscal year 2025 guidance, attributing part of its success to advancements in artificial intelligence initiatives. Adobe’s AI-derived annual recurring revenue has doubled over the past six months, reaching $250 million from new standalone AI products like Firefly and Gen Studios, achieving this milestone one quarter ahead of schedule.
Several analyst firms have responded to Adobe’s recent performance with varying adjustments to their price targets while maintaining positive ratings. Oppenheimer and RBC Capital reiterated their Outperform ratings, with price targets of $460 and $430, respectively, highlighting the company’s AI progress. Bernstein, despite lowering its price target to $508, also maintained an Outperform rating, citing solid quarterly results and favorable foreign exchange rates. BofA Securities and Evercore ISI both lowered their price targets to $460 and $450, respectively, but maintained positive ratings, acknowledging Adobe’s growth in core offerings and new AI-first products.
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