On Thursday, Piper Sandler expressed a continued positive outlook for Adobe Systems Incorporated (NASDAQ:ADBE), reiterating an Overweight stock rating and a $600.00 price target. According to InvestingPro data, Adobe currently commands a market capitalization of $170 billion, with analysts’ price targets ranging from $390 to $660, suggesting potential upside from current levels. The firm’s analyst, Brent Bracelin, highlighted Adobe’s strong start to the fiscal year 2025, noting a 1% top-line beat and the reaffirmation of the company’s full-year guidance for 11% Digital Media Annualized Recurring Revenue (ARR) growth. The company’s impressive 89% gross profit margin and robust revenue growth of 10.8% over the last twelve months support this positive outlook.
Bracelin drew attention to the potential of Adobe’s AI products, which currently generate $125 million in ARR and are expected to double by the end of the year. This growth could serve as a new monetization channel that may contribute to stabilizing or even recovering growth in the next year. The analyst’s optimism was further bolstered by an 11.5% increase in Q1 subscription revenue growth, surpassing Piper Sandler’s estimate of 10.5%.
Adobe’s potential to transition from being a large-cap software laggard to a leader is seen as a driving factor for the positive stance. Bracelin cited several reasons for maintaining the Overweight rating and price target, including what he perceives as an attractive risk-reward ratio at 19 times Enterprise Value to Free Cash Flow on projected CY26 earnings. InvestingPro analysis indicates the stock is currently undervalued based on its proprietary Fair Value model, with a "GOOD" overall financial health score. For deeper insights into Adobe’s valuation and 14 additional ProTips, consider accessing the comprehensive Pro Research Report available on InvestingPro. Additionally, increasing AI monetization at the application layer, new pricing and packaging strategies, and Adobe’s solid track record of executing a business model with over 45% operating margins were noted as key factors supporting the stock’s outlook.
In other recent news, Adobe has been the subject of multiple analyst revisions following its latest earnings report. KeyBanc Capital Markets adjusted its price target for Adobe to $390 from $450, maintaining an Underweight rating due to mixed financial performance, including concerns over certain key metrics like the company’s bookings and current Remaining Performance Obligations. Stifel also revised its price target for Adobe, lowering it to $525 from $567, but maintained a Buy rating, highlighting positive aspects such as Adobe’s AI revenue disclosures and reaffirmation of its full-year guidance. Oppenheimer reduced its price target to $530 from $560 while retaining an Outperform rating, noting Adobe’s increased transparency in its AI product trajectory and subscription revenue breakdown. Bernstein cut its price target to $525 from $587, maintaining an Outperform rating, and pointed out Adobe’s AI-driven revenue growth, despite investor concerns over competitive pressures and reporting structure changes. Lastly, Evercore ISI revised Adobe’s price target to $550 from $650, maintaining an Outperform rating, while noting the company’s reasonable valuation and AI revenue potential. These recent developments reflect Adobe’s ongoing focus on AI initiatives and the varied analyst perspectives on its financial outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.