On Thursday, Piper Sandler adjusted its outlook on Adobe (NASDAQ:ADBE), reducing the price target to $600 from the previous figure of $635. The firm maintained an Overweight rating on the stock.
The adjustment came in response to Adobe's guidance, which fell short of expectations, resulting in decline in share value Thursday.
"The F2025 revenue growth guide of 8.9% y/y implies further deceleration from 10.8% growth in F2024 and DM ARR guidance implies a deceleration from 13% to 11% y/y growth despite cRPO acceleration for the third consecutive quarter," the firm said.
The analyst from Piper Sandler expressed that the projections did not align with the healthy backlog growth that has been observed. The revised price target reflects the new expectations set forth by the guidance. The analyst acknowledged that their initial assumption regarding an improvement in subscription and cRPO backlog growth metrics, potentially leading to a change in the narrative for Adobe, was premature and overly optimistic.
Despite the lowered price target and the disappointing guidance, Piper Sandler remains optimistic about Adobe's long-term prospects to drive earnings per share (EPS) growth. The firm's stance suggests confidence in Adobe's overall business strategy and its ability to generate value for shareholders in the future.
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