Mizuho Securities analysts said they think Adobe (NASDAQ:ADBE) will become “a super popular funding short” in the following 90 days.
The analysts’ remarks come after ADBE’s recent sharp decline to multi-month lows, plummeting 14% last Friday, before recovering above the $500 mark.
Adobe is “One of the few tech stocks to trade down” in the latest market rally driven by strength in the semiconductor sector and the Fed’s decision to keep interest rates unchanged. The central bank reiterated expectations of three rate cuts in 2024.
Adobe is set to host its Summit conference next week, but the impact of this event may be diminished due to the company's recent guidance on lower-than-expected net new Annual Recurring Revenue (ARR) and “weakish commentary.”
“Bear thesis of share loss in text to image will not be disproved until they beat and raise. That simple. Doesn’t sound like will happen in next qtr, maybe two,” the analysts wrote.
The Mizuho analysts maintain a long-term positive outlook on the stock, saying the current negative sentiment toward ADBE is “way overdone,” similar to the situation with Oracle (NYSE:ORCL) two weeks prior.
A single improved earnings report from Oracle quickly propelled its stock to new highs, they noted.