Why Analysts Can't Quit Adobe Even After Disappointing Revenue Guidance

Adobe (ADBE) shares dropped Thursday aft nan company’s results nan time earlier came pinch an underwhelming gross outlook, but analysts still person mostly bullish, if tempered, expectations for artificial intelligence (AI) monetization by nan company. 

The Creative Cloud institution “has been a frustrating banal for overmuch of FY24,” Mizuho Americas analysts said successful a statement Thursday. The patient maintained its “outperform” standing but lowered its value target to $620 from $640. Adobe banal fell more than 13% soon aft nan opening bell, and precocious traded astatine $480.37, disconnected 12.6%. The banal has dropped astir 20% successful 2024.

Higher-Priced Firefly AI Toolset Coming

Despite nan little value target, nan Mizuho analysts "remain assured ADBE will importantly monetize its Generative AI innovations going forward,” they wrote. 

Adobe Digital Media President David Wadhwani said nan institution plans to present a much costly type of its Firefly generative AI toolset, according to an net telephone transcript provided by AlphaSense. The offering is meant to "monetize caller users" and summation average gross per user, Wadhwani said.

Bank of America (BofA) analysts connected Thursday lowered their Adobe value target to $605 from $640 but likewise maintained their “buy” rating.

The BofA analysts described nan astir caller 4th arsenic ending "a twelvemonth of delayed gratification for AI," though they said they've seen "some encouraging starring indicators for reacceleration arsenic we caput into adjacent year."