On Thursday, Adobe Inc. (NASDAQ:ADBE) saw its stock rating downgraded from Buy to Hold by TD (TSX:TD) Cowen, with a notable reduction in the price target to $550 from the previous $625.
The firm cited several factors influencing the decision, including Adobe's fourth quarter net new annual recurring revenue (NNARR), which surpassed forecasts by approximately 5%, marking its smallest percentage beat since the fourth quarter of 2022. Additionally, the forecasted growth for fiscal year 2025 of 8-10% fell short of the market's expectation of 11%.
"A prioritization of AI adoption over monetization is leading to continued growth deceleration trends, w/ potential to fall into single digits," said analysts at TD Cowen.
The analysts also pointed out that the benefits from pricing adjustments are expected to diminish next year.
Furthermore, the introduction of new go-to-market (GTM) strategies in the first quarter pose some risk of disruption. This comes at a time when recent checks have yielded mixed results, adding to the uncertainty around Adobe's near-term performance.
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