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Adobe Inc. (ADBE) is a diversified software company headquartered in San Jose, California. Valued at $235.4 billion by market cap, the company operates through Digital Media, Digital Experience, and Publishing and Advertising segments. Adobe's products, services, and solutions are utilized globally to create, manage, deliver, measure, optimize, and engage with content, driving digital experiences across various platforms.
Shares of this technology giant have underperformed the broader market considerably over the past year. ADBE has gained 4.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 19.7%. In 2024, ADBE stock is down 11%, while SPX is up 12.1% on a YTD basis.
Narrowing the focus, ADBE has also lagged behind the Invesco AI and Next Gen Software ETF (IGPT). The exchange-traded fund has gained about 27.7% over the past year. Moreover, the ETF’s 8.9% gains on a YTD basis outshine the stock’s double-digit losses over the same time frame.
In 2024, ADBE faced challenges as investors anticipated a potential decrease in software spending in favor of exploring artificial intelligence (AI) initiatives.
However, on Jun. 14, ADBE shares closed up more than 14% after the company reported its Q2 results the previous day. Its revenue of $5.31 billion was better than the consensus estimates of $5.29 billion. Its adjusted EPS increased 14.6% year over year to $4.48. For Q3, the company expects its revenue to be between $5.3 billion and $5.4 billion and adjusted EPS to be between $4.50 and $4.55.
Moreover, ADBE raised its full-year revenue forecast to $21.40 billion to $21.50 billion, up from $21.30 billion to $21.50 billion.
For the current fiscal year, ending in November, analysts expect ADBE’s EPS to grow 14.8% to $14.69 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 31 analysts covering ADBE stock, the consensus is a “Moderate Buy.” That’s based on 22 “Strong Buy” ratings, one “Moderate Buy,” six “Holds,” and two “Strong Sells.”
This configuration is slightly more bullish than two months ago when 21 analysts rated it a “Strong Buy.”
On Jul. 30, Matthew Swanson from RBC Capital maintained a “Buy” rating on ADBE, with a price target of $600, implying a potential upside of 13% from current levels.
The mean price target of $610.43 represents a 15% premium to ADBE’s current price levels. The Street-high price target of $730 suggests an ambitious upside potential of 37.5%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
