Davidson upgrades Adobe to Buy with new AI features driving growth

DA Davidson upgraded Adobe to Buy from Neutral with a price target of $640, up from $500. The analyst also added the shares to the firm’s “Best-of-Breed Bison” list. Adobe fits all of the 12 evaluation criteria required to qualify as a “Best-of-Breed Bison” name, including its position as a market leader in a greater than $200B fiscal 2024 total addressable market, “robust and predictable revenue streams, sustainable competitive advantage, exceptional financials, a powerful brand, and a shareholder-oriented management team,” the analyst tells investors in a research note. The firm’s mobile app data analysis suggests Adobe’s new artificial intelligence features are driving user growth. It sees Firefly 2 as one of the most important product launches in years and increased estimates for fiscal 2024 above consensus to reflect benefit of Firefly to the Creative Cloud business.