Analyst Derrick Wood from TD Cowen reiterated a Hold rating on Adobe (ADBE – Research Report) and decreased the price target to $490.00 from $550.00.
Derrick Wood has given his Hold rating due to a combination of factors surrounding Adobe’s current financial performance and future prospects. The company’s first-quarter results were in line with market expectations, but the lack of quarterly guidance from management and a decrease in net new annual recurring revenue (NNARR) growth to the weakest level in eleven quarters have raised concerns. This decline is attributed to the diminishing effects of previous pricing strategies.
Additionally, while Adobe’s new AI-driven products are showing promising revenue growth, they currently contribute a small fraction of the company’s total revenue, and their impact on overall growth remains limited. The company’s strategic initiatives to enhance cross-cloud adoption through a restructured go-to-market approach are seen as positive, but they are expected to take time to fully develop. Consequently, Wood believes that Adobe’s stock is likely to remain within a certain price range until these growth initiatives can significantly influence the company’s financial performance.
According to TipRanks, Wood is a 5-star analyst with an average return of 13.1% and a 57.95% success rate. Wood covers the Technology sector, focusing on stocks such as Microsoft, Salesforce, and ServiceNow.
In another report released on March 11, Citi also maintained a Hold rating on the stock with a $490.00 price target.
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