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Adobe Q2 report may be ‘clearing event,’ says Morgan Stanley

After two straight quarters of Creative Cloud net new annual recurring revenue declines, as well as “a growthier outlook from private competitors and a steady drumbeat of new GenAI diffusion engine innovations,” Adobe sentiment and multiple have been pressured, Morgan Stanley analyst Keith Weiss tells investors in a preview note. The firm sees “a difficult set-up for the Q2 print” with pricing headwinds in Digital Media and enterprise software malaise in Digital Experience, but contends that the report “may prove a clearing event” given the weak investor sentiment, ramping product cycles and easing comps in the second half. The firm maintains an Overweight rating and $660 price target on Adobe ahead of the Q2 report.

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