Proactive Investors - Adobe Inc (NASDAQ:ADBE) remains a compelling buy despite current market challenges and stock underperformance, according to a new research note from analysts at Jefferies.
The comments come ahead of Adobe’s upcoming fiscal 2Q earnings, scheduled for release on June 13.
Jefferies analysts anticipate a stable performance for the quarter with minimal upside, influenced by macroeconomic uncertainties and investor concerns about AI disruptions.
“Despite stock underperformance and discounted valuation, we do not expect a material rebound after FQ2 results, which we expect to come in-line with minimal upside,” analysts wrote.
For FQ2, Adobe’s Digital Media segment is projected to meet high-end guidance without a significant beat, while Digital Experience revenues are expected to align with mid-point guidance.
Jefferies expects Adobe's total revenue to be around $5.29 billion with an expected earnings per share of $4.38, which is in line with Adobe's guidance of between $5.25 billion to $5.3 billion and within the EPS guidance range of $4.35 to $4.40.
Analysts foresee a potential positive shift in the coming quarters, driven by favorable price adjustments, the Adobe MAX creative conference, and seasonal trends.
“Macro remains choppy and investors' AI disruption fears are unlikely to be overcome until FQ4 at the earliest,” Jefferies noted.
Despite the muted opinion, analysts cited Adobe's robust AI capabilities and market positioning, with anticipated steady growth in net new ARR and enterprise competitiveness through strategic bundling and mobile app advancements.
The company is currently trading around $460 against Jefferies’ price target of $700.