Adobe CEO Shantanu Narayan speaks in an interview with CNBC on the floor of the New York Stock Exchange (NYSE) in New York City, USA on February 20, 2024.
Brendan McDiarmid | Reuters
Adobe stock fell 13% on Friday morning after the company reported better-than-expected first-quarter results but gave a lower quarterly revenue outlook.
The design software company’s adjusted earnings per share were $4.48, beating analysts’ expectations of $4.38, according to LSEG (formerly Refinitiv). Revenue of $5.18 billion exceeded analysts’ expectations of $5.14 billion.
For the current quarter, Adobe expects adjusted earnings per share to be between $4.35 and $4.40, compared to analysts’ expectations of $4.38. Total sales are expected to be between $5.25 billion and $5.3 billion, slightly lower than the forecast of $5.31 billion. The company also announced a $25 billion share buyback.
Adobe recently released a new artificial intelligence assistant for its Reader and Acrobat applications that helps users understand information from long PDF documents.
Bank of America analysts reiterated their Buy rating on Adobe stock, lowered their price target for the company from $700 to $640, and expressed optimism about Firefly, the company’s generative AI image creation tool. expressed.
“Our view remains that Adobe is a key beneficiary of AI,” the analysts wrote in a note to investors Thursday. “Although the pace of monetization has been slower than expected, Firefly is one of them. [most] It is a widely used generative AI product with multiple potential paths to monetization. ”
Barclays lowered its price target on Adobe stock from $700 to $630, while maintaining an overweight rating on the stock. Analysts at the company expected the stock to recover on Friday, writing: “We buy this dip as pricing hides Creative Cloud’s underlying strength.”
Morgan Stanley analysts on Friday maintained an overweight rating and $660 price target on Adobe stock, saying “more patience will be needed.”
“The lower-than-expected digital media net new ARR is likely to heighten investor concerns about competitive pressures,” the analysts said. “However, the number of vectors to monetize GenAI is increasing, and new monetizable solutions coming online in the second half of 2024 should help improve the story going forward.”
