Morgan Stanley analyst Keith Weiss downgraded the rating on Adobe to a Hold today, setting a price target of $450.00.
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Keith Weiss has given his Hold rating due to a combination of factors impacting Adobe’s growth trajectory. Initially, the expectation was that Adobe’s innovation in Generative AI would significantly boost its Digital Media ARR growth. However, the actual monetization of these AI capabilities has not met initial expectations, as Adobe has prioritized widespread adoption over immediate revenue generation.
Moreover, there is uncertainty regarding the impact of Generative AI on Adobe’s existing ARR base, with concerns about competitive pressures from external sources like Meta and Google. Despite recognizing the potential value of Adobe’s core offerings and the opportunities presented by Generative AI, the lack of a clear catalyst for accelerating growth in Digital Media ARR has led to a more cautious outlook. While the stock presents a favorable risk/reward profile at its current valuation, the timing of a potential turnaround remains uncertain, prompting the Hold rating.
According to TipRanks, Weiss is a 5-star analyst with an average return of 13.1% and a 64.30% success rate. Weiss covers the Technology sector, focusing on stocks such as Microsoft, Intuit, and Adobe.
In another report released on September 15, Citi also maintained a Hold rating on the stock with a $400.00 price target.