Home Finance and Investments Why analysts can’t leave Adobe despite disappointing earnings forecasts

Why analysts can’t leave Adobe despite disappointing earnings forecasts

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Why Analysts Can't Leave Adobe Despite Disappointing Earnings Forecasts

Important points

Adobe stock fell sharply on Thursday after the company released fiscal year 2025 revenue guidance that was lower than analysts expected. Analysts lowered their price target for Adobe, but maintained a “buy” rating due to optimism about the company’s ability to monetize generated AI. Adobe said it plans to introduce a higher-priced version of its Firefly generative AI toolset.

Adobe (ADBE) stock fell on Thursday after the company’s results a day earlier showed a disappointing revenue outlook, but analysts warned that the company’s monetization of artificial intelligence (AI), even if tempered, was Generally speaking, I have bullish expectations.

Creative Cloud Inc. “has been a frustrating stock for much of FY24,” Mizuho Americas analysts said in a note Thursday. The company maintained its “outperform” rating but lowered its price target from $640 to $620. Adobe stock fell more than 13% shortly after the opening bell and was recently trading 12.6% lower at $480.37. Stock prices fell nearly 20% in 2024.

More expensive Firefly AI toolset now available

Despite the lower price target, Mizuho analysts wrote, “We remain confident that ADBE will continue to significantly monetize its generative AI innovations.”

According to a transcript of the earnings call provided by AlphaSense, Adobe Digital Media president David Wadhwani said the company plans to introduce a more expensive version of the Firefly generation AI toolset. Wadhwani said the service aims to “monetize new users” and increase average revenue per user.

Analysts at Bank of America (BofA) on Thursday lowered their price target for Adobe from $640 to $605, but maintained a “buy” rating on the stock as well.

BofA analysts described the latest quarter as ending “a year of delayed AI gratification,” but said they saw “encouraging leading indicators for re-acceleration into next year.” Ta.

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