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With a market cap of $190.9 billion, Adobe Inc. (ADBE) is a global technology company that provides software solutions through three segments: Digital Media, Digital Experience, and Publishing and Advertising. Its flagship product, Creative Cloud, offers a subscription-based suite of creative tools, while its Digital Experience platform helps businesses optimize customer engagement.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Adobe fits this criterion perfectly. Headquartered in San Jose, California, Adobe generates revenue primarily through licensing fees and cloud-based services.
However, the creative software products maker has dipped 25.4% from its 52-week high of $587.75, reached in September last year. Over the past three months, shares of ADBE have declined 14.6%, which lags behind the iShares Expanded Tech-Software Sector ETF's (IGV) 6.6% drop during the same period.
In the longer term, shares of Adobe have declined 20.5% over the past 52 weeks, underperforming IGV’s 14.1% return over the same time frame. However, ADBE has dipped 1.4% on a YTD basis, which is less pronounced than IGV’s 2.7% decrease.
Since December, last year, ADBE stock has been trading below its 50-day and 200-day moving averages, indicating a bearish trend.
Despite Adobe reporting better-than-expected Q4 2024 adjusted EPS of $4.81 and revenue of $5.6 billion on Dec. 11, its shares tumbled 13.7% the next day due to a disappointing fiscal 2025 outlook. The company’s Q1 2025 revenue guidance of $5.6 billion - $5.7 billion missed the consensus estimate, while full-year revenue guidance of $23.3 billion - $23.6 billion fell short of the expectation. Additionally, Adobe warned that currency headwinds and the ongoing shift from perpetual to subscription-based models would reduce FY25 revenue by $200 million.
In comparison with its rival, Salesforce, Inc. (CRM) has fallen 10.9% YTD, a steeper decline than Adobe’s drop. But, over the past year, CRM has experienced a marginal dip compared to ADBE’s decline.
Despite the stock’s weak performance, analysts are moderately optimistic about its prospects. ADBE has a consensus rating of “Moderate Buy” from the 34 analysts covering the stock, and it is currently trading below the mean price target of $568.84.
