- Morgan Stanley pointed to the need for clearer evidence of faster growth and better forward guidance to ease investor concerns.
- Wells Fargo also lowered its price target to $330 from $405, retaining an Overweight rating.
- Barclays highlighted that Adobe’s fiscal Q1 net new annual recurring revenue of $400 million was below their $460 million estimate.
Adobe Inc. (ADBE) is facing a wave of cautious analyst sentiment following its first quarter (Q1) earnings, with multiple firms cutting price targets and adjusting ratings amid mixed performance and leadership changes.
The company’s early pivot to AI monetization and portfolio expansion has not fully convinced investors of a rapid growth rebound.
Adobe stock traded over 8% lower in Friday’s premarket. On Stocktwits, retail sentiment around the stock jumped to ‘extremely bullish’ territory from ‘bearish’ the previous day. Message volume shifted to ‘extremely high’ from ‘low’ levels in 24 hours.
The stock saw a 1542% surge in retail messages over a 24-hour period.
Morgan Stanley Highlights Growth Concerns
Morgan Stanley analyst Keith Weiss slashed Adobe’s price target to $365 from $425 while maintaining an ‘Equal Weight’ rating, citing the need for stronger proof of growth acceleration and forward outlook improvements to reassure investors about AI competition challenges, according to TheFly.
Wells Fargo also lowered its price target to $330 from $405, retaining an Overweight rating, noting that Adobe’s net new annual recurring revenue (NNARR) underperformance and CEO transition have temporarily put the company back in the penalty box.
Barclays Cuts Rating Amid CEO Transition
Barclays downgraded Adobe to Equal Weight from Overweight and set a price target of $275, down from $335. Analysts highlighted fiscal Q1 NNARR of $400 million, below their $460 million estimate, while the fiscal 2026 guidance remained unchanged.
Barclays emphasized that the most significant development of the quarter is the planned exit of longtime CEO Shantanu Narayen, which has unsettled investor confidence and put the stock on the sidelines.
Narayen, who has been heading the software design company since 2007, stated he will resign once a successor is appointed but will continue serving as the company’s board chair.
ADBE stock declined by over 28% in the last 12 months.
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