By Senad Karaahmetovic
Shares of Adobe (NASDAQ:ADBE) are down over 1% in premarket Monday after a Mizuho analyst cut the rating to Neutral from Buy.
The analyst also slashed his estimates for FQ4 and FY2023, which ultimately led to the lower price target - $440 per share from $480.
The analyst made a downgrade move just three days before the company is due to report FQ3 earnings as he believes Adobe is operating in a “more difficult environment than expected.”
"While we believe ADBE guided conservatively enough for F3Q, we wouldn't be surprised by a guide down for F4Q. We also believe Street revenue and EPS estimates for FY23 look too high. In our view, ADBE remains well-positioned to benefit from digital transformation with its highly comprehensive end-to-end offering," the analyst said in a client note.
Along these lines, the analyst sees Adobe stock trading range-bound in the short and mid-term.
On the other hand, a Morgan Stanley analyst doesn’t necessarily agree with the Mizuho analyst as she sees improving sentiment on the back of the DX deals closures in FQ3, Creative Cloud Express ramping nicely, as well as the situation where slower hiring could help operating margins.
"Our conversations with channel partners suggested Adobe performed largely in line with expectations," the analyst added.
Adobe is due to report earnings this Thursday.