Adobe Analysts Split After Strong Q4, Weak 2025 Guidance

Shares of Adobe Inc ADBE tanked in early trading on Thursday, despite the company reporting upbeat fiscal fourth-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Piper Sandler On Adobe

Analyst Brent Bracelin reiterated an Overweight rating, while reducing the price target from $635 to $600.

Adobe reported "solid" results for its fiscal fourth quarter, with revenues beating consensus by $81 million, Bracelin said in a note. Subscription revenues grew by 12.6% year-on-year to $5.4 billion, accelerating from 11.9% in the previous quarter and coming in higher than the average of 11.8% in the previous nine quarters, he added.

The company generated healthy non-GAAP earnings growth of 13% year-on-year for the fourth quarter and 15% for the year, the analyst stated. The stock came under pressure due to management's fiscal 2025 revenue growth guidance of 8.9%, which implies a deceleration from 10.8% in fiscal 2024, he further noted.

Oppenheimer On Adobe

Analyst Brian Schwartz maintained an Outperform rating, while lowering the price target from $625 to $600.

Although Adobe's fourth-quarter results were "decent," Creative Cloud's net new annualized recurring revenue grew only modestly, Schwartz said. Management's initial fiscal 2025 outlook was disappointing, he added.

"Specifically, the FY25 net new Digital Media ARR is guided slightly below what the business generated in FY22-24 per annum from less pricing benefits, continuing focus on AI user engagement over monetization growth, negative FX, and conservatism," the analyst wrote. The takeaway for investors could be that Adobe’s growth is being impacted by "increasing competition in the low-end of the market and a slow monetization path for the AI technologies," he further stated.

Goldman Sachs On Adobe

Analyst Kash Rangan reaffirmed a Buy rating and price target of $640.

Adobe's fiscal 2025 guidance reflects a deceleration in revenue growth to 9%, Rangan said. The revenue growth contribution from company's Gen AI solutions may be delayed until fiscal 2026, he added.

Gen AI presents a total addressable market of more than $4 billion, driven by higher retention, increased user spend, and new monetization strategies, the analyst stated. Adobe is on track to grow revenues "by 2x to 3x from current levels over the next few years, potentially entering the top ranks of software companies with $40bn+ of revenues," he further wrote.

Check out other analyst stock ratings.

KeyBanc Capital Markets On Adobe

Analyst Jackson Ader maintained an Underweight rating and price target of $450.

Adobe generated revenue growth of 11.1%, higher than consensus of 9.7%, Ader said. "Bookings saw the strongest sequential growth we have in our model, up 30.6% quarter-over-quarter to $7.427B, the largest absolute dollar figure we have in our model," he wrote.

However, management issued a disappointing outlook for 2025, with the midpoint of Digital Media revenue growth of 9.2% missing expectations and margin guidance coming in below expectations, the analyst stated. "AI monetization continues to get kicked further and further down the road," he added.

JPMorgan On Adobe

Analyst Mark Murphy reiterated an Overweight rating and price target of $580.

Adobe's sequential revenue growth was healthy, despite Cyber Monday being excluded from its fiscal fourth quarter, which ended on Nov.29, Murphy said. The company generated solid year-on-year growth in RPO and cRPO, with sequential growth in both and healthy upside to guidance, he added.

While Adobe's fiscal 2025 disappointed markets, the consensus was set "well ahead of the implied FQ4 exit-rate," the analyst wrote. Also, after accounting for forex and model transition dynamics, the guidance implies around 10% growth on constant currency terms, he further stated.

RBC Capital Markets On Adobe

Analyst Matthew Swanson reaffirmed an Outperform rating and price target of $610.

Adobe delivered strong quarterly results, with Digital Media NNARR coming in at $578 million, beating consensus of $551.0 million, Swanson said. Revenue growth of 11% was better than expected, he added.

"Another highlight was RPO growth of 16% as we continue to think this is a positive metric for enterprise traction around GenAI specifically in the Experience cloud," the analyst wrote. The company's full-year revenue guidance of $23.425 billion at the midpoint fell short of consensus at $23.778 billion, but the guidance includes FX headwinds of $200 million, he further stated.

JMP Securities On Adobe

Analyst Patrick Walravens maintained a Market Perform rating on the stock.

Adobe reported its quarterly results higher than expectations, with non-GAAP earnings of $4.81 per share coming in higher than the consensus of $4.67 per share, Walravens said. Adobe issued soft guidance for fiscal 2025, with total revenue of $5.63 billion to $5.68 billion coming in much lower than the consensus of $5.73 billion, he added.

Although Adobe is "very well managed by CEO Shantanu Narayen and CFO Daniel Durn," there are two main areas of risk, the analyst stated. First is Creative Cloud "growing more slowly than Canva," and second, the company's foundational models for Generative Fill, Text to Image, Generative Extend, and Generate Video face "intense pressure from rapid innovation coming out of startups and AI labs, such as OpenAI," he further wrote.

ADBE Price Action: Shares of Adobe were down 12.7% to $479.78 at the time of publication Thursday.

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