Adobe (Adbe) has reported strong third-quarter revenue, which has increased confidence in its growth potential and AI strategy. Following this news, several analysts have recommended buying the stock, with some even raising their price targets.
AI momentum gains speed
Analysts are noting Adobe’s progress in its AI-First annual recurring revenue (ARR), surpassing the $250 million target a bit sooner than expected. Goldman Sachs points out that this indicates significant momentum. If the trend persists, it could not only halt the slowdown in Adobe’s main business but also foster new growth.
Oppenheimer’s Brian Schwartz echoed these thoughts, highlighting that Adobe’s AI-First ARR has doubled in the past six months and that the company achieved its highest operating margin of the year. This suggests that Adobe’s AI strategy is yielding tangible business results.
However, he also cautioned that slow growth in new digital media subscriptions and a cautious outlook for fourth-quarter revenue might raise worries about Adobe’s overall growth potentially slipping below 10% next year.
Barclays analyst Sackett Caria is positive about Adobe’s future, boosting his price target to $465 while maintaining a buy recommendation. He mentioned that the company has generated $500 million in new subscription revenue beyond expectations, with AI-driven revenue doubling in just two quarters. Kalia believes the strong demand for Adobe’s AI tools suggests continued growth for the company.
What will Adobe be like?
Looking ahead, analysts are eager for the Adobe Max and Investor Meeting scheduled for October 28th. They anticipate the company will share more details about its AI roadmap and long-term strategy. These events could also act as catalysts, especially if Adobe reveals effective cross-selling and upselling across its products.
While Adobe’s third-quarter results and robust AI adoption are promising, investors are keenly monitoring whether the company can sustain double-digit growth.
Is Adobe stock bought, sold or held?
On Wall Street, Adobe stock has a moderate buy consensus rating based on 22 buy recommendations, 7 holds, and 2 sells over the last three months. The average target price for ADBE stock is $470.96, indicating a potential rise of about 34.86%.
