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San Jose, California-based Adobe Inc. (ADBE) is a diversified software company operating through Digital Media, Digital Experience, and Publishing and Advertising segments. With a market cap of $188.5 billion, Adobe is one of the largest software companies in the world.
The software giant has significantly underperformed the broader market over the past year. Adobe’s stock has plummeted 28.1% over the past 52 weeks and gained a modest 1.4% on a YTD basis, compared to the S&P 500 Index’s ($SPX) 20.7% surge over the past year and 3.1% gains on a YTD basis.
Zooming in further, Adobe has also lagged behind the iShares Expanded Tech-Software Sector ETF’s (IGV) 20.4% gains over the past year and a 6.3% surge in 2025.
Despite crushing analysts’ estimates, Adobe’s stock plunged 13.7% in the trading session after the release of its Q4 results on Dec. 11. Driven by strong demand for its subscription-based software and services, Adobe’s total revenues for the quarter surged 11.1% year-over-year to $5.6 billion, exceeding the Street’s expectations by 1.2%. Meanwhile, driven by disciplined expense management, Adobe’s net income increased by a robust 13.5% year-over-year to $1.7 billion. Meanwhile, its non-GAAP EPS of $4.81 also surpassed analysts’ consensus estimates by a notable margin.
However, the company’s Q1 2025 revenue guidance range of $5.63 billion to $5.68 billion fell short of the Street’s expectations of $5.73 billion by a notable margin, unsettling investor confidence.
For the current fiscal 2025, ending in November, analysts expect Adobe to report a solid 11.7% year-over-year growth in non-GAAP earnings to $16.65 per share. However, the company has a mixed earnings surprise history. It has surpassed the Street’s bottom-line estimates thrice over the past four quarters while missing on one other occasion.
Among the 33 analysts covering the ADBE stock, the consensus rating is a “Moderate Buy.” That’s based on 21 “Strong Buy,” one “Moderate Buy,” nine “Hold,” one “Moderate Sell,” and one “Strong Sell” rating.
This configuration is slightly more bullish than a month ago when two analysts gave “Strong Sell” recommendations.
On Jan. 7, Wells Fargo (WFC) analyst Michael Turrin reiterated a “Buy” rating on ADBE, while setting a price target of $640.
ADBE’s mean price target of $575.42 represents a 27.6% premium to current price levels, while its street-high target of $703 indicates a staggering 55.8% upside potential.
