On Friday, Jefferies, a global investment banking firm, maintained its Buy rating on Adobe stock (NASDAQ:ADBE) with a price target of $590.00. The firm’s analyst, Brent Thill, has expressed confidence in Adobe’s financial outlook following the announcement of a price increase for its Creative Cloud All Apps plans. According to InvestingPro data, Adobe maintains impressive gross profit margins of 89% and has received a "GREAT" financial health score, supporting the positive outlook.
The price hike, which amounts to an additional $10, marking an 11-17% increase, is set to take effect on June 17 or upon subscription renewal. This adjustment is expected to reinforce Adobe’s revenue guidance for fiscal year 2025, which anticipates a growth rate of 8.9% at the midpoint, compared to 10.8% growth in fiscal year 2024. The company has demonstrated solid execution with revenue growing at 10.5% over the last twelve months.
Thill noted that the price increase, which had already been factored into the FY25 guidance, now makes the company’s revenue projections appear conservative. He highlighted that the price increase, coupled with Adobe’s Firefly plans, which range from $10 to $200 per month, should bolster the company’s position in the artificial intelligence space.
Additionally, Thill finds Adobe’s valuation attractive, citing a roughly 40% discount to the median of large-cap software companies, with Adobe trading at approximately 18 times its calendar year 2026 enterprise value to free cash flow (EV/FCF). InvestingPro analysis suggests Adobe is currently undervalued, with a PEG ratio of just 0.57, indicating attractive pricing relative to its growth potential. Discover more detailed valuation insights and 12+ additional ProTips with an InvestingPro subscription.
Adobe’s strategic pricing decisions and its ventures into AI with Firefly plans are expected to contribute positively to the company’s financial performance in the coming years, as reflected in Jefferies’ reaffirmed Buy rating and price target. For comprehensive analysis of Adobe’s AI initiatives and financial outlook, access the detailed Pro Research Report available exclusively on InvestingPro, covering what really matters for informed investment decisions.
In other recent news, Adobe has announced the appointment of Louise Pentland as its Chief Legal Officer and Executive Vice President. Pentland brings extensive experience from her previous roles at major technology firms such as Roku (NASDAQ:ROKU), Disney (NYSE:DIS), PayPal (NASDAQ:PYPL), and Nokia (HE:NOKIA). This strategic move aims to strengthen Adobe’s leadership team as the company continues to focus on personalized digital experiences.
In terms of financial outlook, DA Davidson has reaffirmed a Buy rating on Adobe, maintaining a price target of $450. The firm believes that the market has undervalued Adobe, despite concerns regarding the impact of artificial intelligence on the company’s valuation. On the other hand, BMO Capital Markets has reduced Adobe’s price target to $450 from $495, while maintaining an Outperform rating. This adjustment is attributed to the competitive landscape, particularly the growth of Canva in the creative software market.
RBC Capital Markets has also revised its price target for Adobe, lowering it to $480 from $530, but continues to rate the stock as Outperform. RBC’s analysis indicates that Adobe maintains strong mind-share among professional and prosumer users despite increased competition. Meanwhile, UBS has adjusted its price target to $380 from $410 and maintains a Neutral rating. UBS’s assessment reflects concerns about Adobe’s growth forecast and potential AI-related disruptions.
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