Adobe’s Stock Struggles Amid Competitive Challenges
With a market cap of $217.8 billion, San Jose, California-based Adobe Inc. (ADBE) is a global leader in software solutions. Known for its creative and digital experience products, Adobe provides tools for content creation, document management, and customer experience optimization to professionals and enterprises worldwide.
Adobe’s Underperformance Compared to Market Peers
Shares of Adobe have significantly underperformed the broader market over the past 52 weeks. ADBE has dipped 15.5% over this time frame, while the broader S&P 500 Index ($SPX) has gained 36.8%. In 2024, shares of ADBE are down 17.1%, contrasting with SPX’s 25.7% increase on a year-to-date basis.
Looking more closely, ADBE has also lagged behind the Technology Select Sector SPDR Fund’s (XLK) 34.9% returns over the past year and a 23.2% rise in 2024.
Q3 Earnings Report Sparks a Sell-off
Adobe’s stock dropped 8.5% after the company reported fiscal Q3 results on September 12. Although the results beat expectations, the company provided weaker-than-expected guidance for Q4. Q3 revenue reached $5.4 billion, with earnings of $4.65 per share exceeding analyst forecasts. However, Adobe’s Q4 revenue guidance of $5.5 to $5.6 billion fell short of Wall Street’s targets for both revenue and earnings, projecting $4.36 to $4.68 per share.
Furthermore, the digital media segment’s projected annual recurring revenue of $550 million disappointed investors, falling below the $561.1 million expected by analysts. Concerns regarding the traction of its newer AI-powered products contributed to the decline, highlighting investor uncertainty about Adobe’s place in the competitive generative AI space.
Outlook for Earnings Growth and Analyst Opinions
For the current fiscal year ending in November 2025, analysts expect ADBE’s EPS to grow 15.8% year-over-year to $14.82. Over the past four quarters, the company has had a mixed earnings surprise history, beating consensus estimates in three instances while missing them once.
Among the 31 analysts covering Adobe, the consensus rating is a “Moderate Buy.” This rating is based on 22 “Strong Buy” ratings, one “Moderate Buy,” six “Holds,” and two “Strong Sells.”
Positive Analyst Sentiment and Future Price Predictions
On September 13, Wolfe Research reaffirmed its “Outperform” rating and a price target of $685 on Adobe, underscoring the company’s capabilities in digital media and its potential with new AI products like GenStudio and Firefly. The firm believes that effective monetization of Firefly could improve investor confidence and stimulate growth in the burgeoning generative AI market.
The mean price target stands at $609.27, indicating a 23.2% premium over ADBE’s current price. Meanwhile, the highest street price target is $703, suggesting an upside of 42.1% from present levels.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
