Investing.com - BMO Capital Markets has taken a deep look at Adobe Systems (NASDAQ:ADBE), via a creative cloud survey, and has decided to remove the computer software company from its top pick list.
“Our net conclusion from our survey is positive, but we have meaningful incremental concerns about the growing competitive threat,” analysts at BMO said, in a note dated March 11.
BMP maintained an ‘outperform’ rating on Adobe, but cut its 12-month price target to $660 from $690, and removed the software giant from its ‘top pick’ list.
Adobe stock closed Friday at $551.69.
Adobe is a market leader in its three core product categories: Creative Cloud, Document Cloud, and Experience Cloud, BMO said.
“We believe AI and Adobe Express can help net new ARR (annual recurring revenue) and growth,” the bank said.
However,over the past twelve months, 57% of professional survey respondents said they increased their use of competitors compared to Creative Cloud versus 40% in the April 2023 survey, BMO said.
The data was more positive in the enterprise segment but the trend was still incrementally worse than in our April 2023 survey, while more than 60% of Creative Cloud All Apps license users, which we would consider to be stickier users in theory, had increased their use of competitors over the past 12 months.
“We think that competition remains robust, and thus our conviction in the magnitude of these growth drivers is less than we had previously thought when we made Adobe our top pick in summer 2023,” BMO added.