Adobe Analyst Drops Bearish Stance On Valuation, Fundamental Improvement: Retail Sentiment Flips To ‘Bullish’

Adobe Systems, Inc. (ADBE) has convinced a bearish analyst to shift to a neutral stance on the stock, hoping that fundamentals will continue to improve throughout the year.

KeyBanc analyst Jackson Ader upgraded Adobe to ‘Sector Weight’ from ‘Underweight,’ TheFly reported. The analyst said he sees little room for downside as the stock has raked up a loss of nearly 13% for the year-to-date period.

Additionally, Ader said he expects revisions to fundamentals throughout the remainder of the year.

Given these expectations, the analyst said arguing for continued multiple compression relative to peers is hard.

Adobe stock fell below the psychological level of $400 earlier this month following the visual illustration and editing software maker’s first-quarter earnings. After a quarterly beat, the company issued weak revenue guidance, denting investor sentiment. 

Earlier this week, following the Adobe Summit event and analyst day, RBC Capital Markets analyst Matthew Swanson maintained an 'Outperform' rating and $530 price target. The analyst noted that the company offered more color on its generative artificial intelligence (GenAI) monetization as well as traction it has seen within its new subscription revenue metrics,.

Adobe's product announcements continued to cement the bridge between the Creative and Experience clouds, he added.

On Stocktwits, retail sentiment toward Adobe stock has flipped to ‘extremely bullish’ (82/100)  by the end of Thursday’s session from the ‘extremely bearish’ mood that prevailed a day ago. The message volume remained ‘high,’ although tempering a bit.

A bullish watcher said the stock is undervalued and should be trading at the $500s level, leaving scope for a huge upside.

Adobe ended Thursday’s session up 0.44% at $389.61. In premarket trading, the stock gained 0.13% to $390.12.

The Koyfin-compiled consensus price target for Adobe stock is $522.11, implying an upside potential of 34%.

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