Adobe: An 'AI Winner' Shines In FQ2, Analysts Weigh In

Shares of Adobe Inc ADBE climbed in early trading on Friday, after the company reported better-than-expected results for its fiscal second quarter. Here are some key analyst takeaways from the earnings release.

Mizuho Securities On Adobe

Analyst Gregg Moskowitz reiterated a Neutral rating, while raising the price target from $450 to $520.

“Net new Digital Media ARR of $470M easily beat conservative guidance of ~$420M, and was also above our upside target of $450M,” Moskowitz said in the note. While the fiscal third-quarter guidance was above consensus estimates, management modestly raised their fiscal 2023 outlook, he added.

“In our view, ADBE remains well-positioned to benefit from digital transformation with its highly comprehensive end-to-end offering,” the analyst wrote. “In addition, despite macroeconomic forces, we believe fundamentals appear to be on firmer ground, and GenAI offers legitimate upside potential over the medium-term and beyond,” he added.

RBC Capital Markets On Adobe

Analyst Matthew Swanson maintained an Outperform rating, while raising the price target from $460 to $555.

Adobe’s “strong” results were driven by “continued strength from the Creative,” which offset the somewhat soft enterprise spend environment, Swanson said.

“As expected, the call focused on a strategic and product roadmap around generative AI as management sees momentum building in creative, as we continue to feel the strategic alignment of creative and experience has never been better,” he added.

BofA Securities On Adobe

Analyst Brad Sills reiterated a Neutral rating, while raising the price target from $480 to $575.

The second quarter represented the third straight quarter of an increase in Digital Media net new ARR, which is likely driven largely by Adobe's “improved competitive position, particularly in the communicator market with Adobe Express traction,” Sills wrote in a note.

“Generative AI tool, Firefly, has generated an impressive 500mn assets,” the analyst said. “Commentary suggests the expectation for AI tailwinds (from Firefly and co-pilot) across top of funnel, retention, and premium mix,” he added.

Adobe has been building AI for years and its investments going ahead are likely to be gradual, Sills stated, adding that he views Adobe “as an AI winner.”

Check out other analyst stock ratings.

JMP Securities On Adobe

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

Adobe reported “another good quarter,” but its guidance was “a bit mixed,” factoring in the impact of the tougher enterprise spending environment, Walravens said.

"While we are positive about Adobe’s approach to embedding artificial intelligence into its solutions, particularly its focus on copyright-compliant generative AI, we are more cautious about its exposure to global competition regulation and to a challenging macroeconomic environment," he added.

William Blair On Adobe

Analyst Jake Roberge maintained an Outperform rating on the stock.

Adobe’s second-quarter results were strong and beat expectations on all key metrics, Roberge stated. The results highlighted better-than-expected digital media growth and strong traction in the new generative AI offerings, he added.

“While Adobe’s generative AI products are still in beta, the company noted that generative AI is driving strong demand for its existing products as it is making these solutions more accessible to a wider audience,” the analyst further wrote.

Oppenheimer On Adobe

Analyst Brian Schwartz reiterated a Perform rating.

Adobe's higher-than-expected results were “anchored by a 12% beat in net new Digital Media ARR,” Schwartz said.

“Digital Media bookings display the largest quarterly upside in two years, is set for continuing strong beats in the 2H:FY2023 owing to a low bar, and estimates/guidance are rising,” he added.

ADBE Price Action: Shares of Adobe had risen by 2.74% to $504.36 at the time of publishing Friday.

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