Adobe Shares Slide After Q4 Print, But These Analysts Are Optimistic About GenAI Tailwinds

Adobe Inc ADBE shares tanked in early trading on Thursday, even after the company reported upbeat fiscal fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Stifel On Adobe

Analyst Parker Lane maintained a Buy rating while raising the price target from $600 to $625.

Adobe closed the year with a “solid” quarter, Lane said in a note. While the quarterly results exceeded expectations, the guidance for the current quarter and fiscal 2024 missed the consensus estimates, he added.

“The guide was surprising considering management's positive tone and our belief that Adobe is among the best-positioned names in our coverage from an AI standpoint,” the analyst stated.

Piper Sandler On Adobe

Analyst Brent Bracelin reiterated an Overweight rating and price target of $650.

Adobe’s strong quarterly results were “underpinned by the fourth straight quarter of 13% ex-FX growth after two years of moderation and the first quarter with $5B+ revenue,” Bracelin wrote in a note. The pressure on the stock was due to “disappointing guidance and high investor expectations,” he added.

“While the expected drag in 1H24 on net new ARR (attributed to lapping the pricing actions taken in 2022) coupled with clarification around the pricing increase initiated in November (affecting a smaller proportion of the Creative Cloud base than originally expected) may hinder NT reacceleration expectations, we remain optimistic that new product innovation, continued PLG and top-of-funnel momentum, and gen AI tailwinds could drive upside in F2024,” the analyst further stated.

Check out other analyst stock ratings.

Mizuho Securities On Adobe

Analyst Gregg Moskowitz reaffirmed a Buy rating and price target of $680.

Adobe reported “good” quarterly results, with net new Digital Media annual recurring revenue (ARR) of $569 million higher than guidance of $520 million, Moskowitz said. “Moreover, ADBE's new product/GenAI growth drivers remain very exciting,” he added.

“Conversely, ADBE initiated a FY24 outlook modestly below expectations, although we see no reason for concern here,” the analyst wrote. “In our view, ADBE remains very well positioned to benefit from digital transformation with its highly comprehensive end-to-end offering,” he added.

RBC Capital Markets On Adobe

Analyst Matthew Swanson maintained an Outperform rating and price target of $615.

Although management announced full-year guidance below expectations, they said they “continue to feel bullish on trends as well as the overall momentum exiting the year” and the guidance reflected “a more prudent outlook given the early stage of a number of their growth drivers,” Swanson said.

Adobe is “well positioned as a long-term GenAI beneficiary,” he added.

JMP Securities On Adobe

Analyst Patrick Walravens reiterated a Market Outperform rating on the stock.

“The company announced better-than-expected F4Q23 results, with non-GAAP EPS of $4.27 (consensus $4.14) and a 46.4% operating margin on revenue of $5.05B (consensus $5.01B), up 12% y/y (13% in cc), up from 10% last quarter but flat on a cc basis,” Walravens said in a note.

Adobe’s products often play a mission critical in the digital-first world, “especially the creative cloud,” the analyst stated. He added that the company has a “massive TAM” of $205 billion.

ADBE Price Action: Shares of Adobe had declined by 2.70% to $588.86 at the time of publication Thursday.

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