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On Friday, UBS analyst Karl Keirstead adjusted the price target for Adobe stock (NASDAQ:ADBE) to $380, a decrease from the previous $410, while maintaining a Neutral rating on the company's shares. With Adobe currently trading at $350.05, near its 52-week low of $332.01, InvestingPro analysis suggests the stock may be undervalued relative to its Fair Value. Keirstead's assessment suggests that the current share price already factors in potential challenges to Adobe's growth forecast and possible disruptions from AI developments.
The analyst's commentary highlights that at 15 times the estimated Free Cash Flow (FCF) for the calendar year 2026, Adobe's stock seems to account for some near-term risks. These risks pertain to the company's ability to meet its growth targets, with current revenue growth at 10.54% and impressive gross profit margins of 89.15%. The concerns also include medium-term risks associated with AI-related disruptions in the industry. For deeper insights into Adobe's financial health and growth prospects, InvestingPro subscribers have access to 14+ additional expert tips and comprehensive valuation metrics.
Keirstead further notes that while significant further downside to Adobe's stock price is not anticipated, prevailing concerns might make it difficult for investors to disregard these risks. The stance of UBS remains neutral until greater confidence in Adobe's second-half guidance is established.
In light of the sector's overall devaluation, the price target has been revised to $380. This new target is based on a 16 times multiple of the forecasted FCF for the calendar year 2026, which Keirstead deems fair when compared to Adobe's peers in the market.
The adjustment in Adobe's price target reflects UBS's cautious outlook on the company, amidst industry-wide considerations and specific uncertainties facing Adobe's future performance metrics.
In other recent news, Adobe has made significant strides with the release of new AI-powered video editing tools in Premiere Pro, including features like Generative Extend and AI-powered Caption Translation. These tools aim to streamline editing workflows and support various video formats, enhancing Adobe's offerings in the creative industry. Additionally, Mizuho (NYSE:MFG) Securities has maintained an Outperform rating for Adobe, with a price target of $575, citing confidence in Adobe's market positioning and potential revenue growth from its Generative AI innovations. On the other hand, Citi has reiterated a Neutral rating with a $430 price target, noting challenges in the adoption of new solutions despite Adobe's strong market position.
TD Cowen has also maintained a Hold rating with a $490 price target, expressing optimism about Adobe's transparency in AI monetization but awaiting more substantial developments. Meanwhile, Citizens JMP analyst Patrick Walravens has reaffirmed a Market Perform rating, suggesting Adobe's stock is fairly valued given its current trading multiples. These developments come amid Adobe's efforts to enhance its product offerings and maintain its competitive position in the technology sector.
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