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Investing.com - Wells Fargo has lowered its price target on Adobe (NASDAQ:ADBE) to $420.00 from $470.00 while maintaining an Overweight rating following the company’s acquisition announcement. This adjustment comes as Adobe trades near its 52-week low of $315.18, with the stock down 28.46% year-to-date. According to InvestingPro data, Adobe appears undervalued based on its Fair Value assessment, with analysts setting targets ranging from $280 to $605.
Adobe revealed plans to acquire SEMrush (NYSE:SEMR) for $12 per share, representing a transaction value of $1.9 billion in an all-cash deal expected to close in the first half of 2026.
The acquisition price represents approximately a 78% premium to SEMrush’s most recent closing price, yet values the company at roughly 4 times its next-twelve-months revenue or about 25 times its next-twelve-months free cash flow.
Wells Fargo estimates the acquisition will add approximately 2 percentage points to Adobe’s growth, translating to about 20 basis points on a pro forma basis, while creating an estimated 60 basis point headwind to margins. Adobe currently maintains impressive 89.14% gross profit margins and has achieved 10.67% revenue growth over the last twelve months.
The firm notes that SEMrush’s SaaS toolset, which focuses on top-of-funnel marketing across digital channels including search, social media, and advertising, provides a valuable data core that complements Adobe’s Digital Experience portfolio. With a PEG ratio of 0.53 and trading at 19.87 times earnings, Adobe’s valuation looks attractive relative to its growth potential. Discover more insights and 13 additional ProTips in Adobe’s comprehensive InvestingPro Research Report, available for subscribers.
In other recent news, Adobe is reportedly nearing a $1.9 billion acquisition of Semrush Holdings , according to a Wall Street Journal report. The deal, which would see Adobe paying $12 per share for Semrush, represents a significant premium over the previous closing price. Meanwhile, Bernstein has reiterated an Outperform rating on Adobe, citing potential enterprise growth with a price target of $508.00. In a separate development, Goldman Sachs has maintained its Buy rating on Adobe, despite a 6% stock decline following Adobe’s A-day event, with a price target of $570.00. This comes as Adobe shifts its fiscal year 2026 disclosure approach to focus on Total Annual Recurring Revenue. Additionally, BMO Capital has reiterated an Outperform rating on Adobe with a $405.00 price target, highlighting Adobe’s collaboration with partner ecosystems. Adobe’s stock recently faced a slight decline after Canva launched a free Creative Operating System, intensifying competition in the digital design space. These developments reflect the dynamic landscape Adobe is navigating in the tech industry.
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