Shares of Adobe (ADBE) continued their downward spiral in trading on Thursday after the software company issued soft guidance for the fourth quarter. The company is making rapid strides in generative AI (GenAI) with innovative tools for image and video creation, but investor sentiment remains cautious. It expects its FY25 revenues to be between $23.3 billion and $23.55 billion, versus analysts’ estimates of $23.8 billion.
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ADBE’s Downbeat Revenue Forecast Sparks Downgrades
Despite projecting robust growth for the latter half of 2025 earlier in the year, Adobe’s revenue forecast has led at least seven brokerages to cut their price targets. Interestingly, five-star-rated Evercore ISI analyst Kirk Materne assigned a Buy rating to ADBE stock with a price target of $650. However, the analyst pointed out that it was important for the company to achieve a “consistent cadence of beat/raise” to “rekindle long-term investor interest,” especially as uncertainty around GenAI monetization continues to weigh on the stock.
The analyst’s price target implies an upside potential of 18.2% from current levels.
RBC Analyst Flags Lack of Monetization Metrics
Meanwhile, RBC analyst Matthew Swanson noted that while Adobe’s GenAI roadmap is on track, the absence of “explicit monetization metrics” has made it difficult for investors to gauge the company’s progress. Similarly, according to a Yahoo Finance report, Morningstar analysts pointed out a disconnect between management’s optimistic outlook and the skepticism evident among investors.
As a result, while Swanson reiterated a Buy rating for the stock, the analyst lowered the price target to $590 from $610. The analyst’s price target implies an upside potential of 7.3% from current levels.
Is ADBE a Good Stock to Buy?
Analysts remain cautiously optimistic about ADBE stock, with a Moderate Buy consensus rating based on 23 Buys, five Holds, and two Sells. Over the past year, ADBE has declined by more than 10%, and the average ADBE price target of $620.88 implies an upside potential of 12.9% from current levels.
