Software maker Adobe (NASDAQ:ADBE) slid nearly 5% in Friday afternoon’s trading, despite some solid results from its third quarter and some equally positive commentary from analysts. There was some negative news to emerge around Adobe, but not necessarily the kind that prompts that kind of slip. So let’s take a closer look at what happened.
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The immediate good news was that Adobe beat estimates all around with its earnings. Both revenue and earnings came in over the line and better yet, Adobe’s sales were actually 10.4% higher than it was in the third quarter of 2022. That prompted some analysts to believe that expectations were simply too high to begin with. Further, Adobe’s fourth-quarter outlook looked conservative to many analysts as well.
Other news was somewhat mixed, however. Analysts encourage investors—and Adobe itself by extension—to consider the “multi-year meaningful generative AI opportunity.” Indeed, the Adobe Firefly lineup recently hit shelves, and customers are buying in. But Gil Luria with D.A. Davidson noted a point less friendly to Adobe: its share price already reflects a lot of its upside potential already in place. However, Adobe is also bringing out new products; for anyone who’s ever recorded audio, you’ll likely appreciate Adobe Premiere Pro’s ability to automatically remove “um” sounds and background noise.
In general, though, analysts are strongly on Adobe’s side. Adobe stock is currently consensus-rated as a Moderate Buy, supported by 19 Buy ratings, eight Holds, and one Sell. Further, Adobe stock offers investors 14.11% upside potential thanks to its average price target of $600.60.
