European banks set to underperform U.S. peers in second quarter, Citi says
UBS reiterated its Neutral rating and $430.00 price target on Adobe (NASDAQ:ADBE) following the company’s second-quarter earnings report. According to InvestingPro analysis, Adobe appears undervalued at its current price of $384.03, with an impressive PEG ratio of 0.63 indicating attractive growth potential relative to its valuation.
The software giant delivered results that were modestly above UBS estimates for the May quarter, with the company slightly raising its fiscal year 2025 revenue and EPS targets. Adobe maintains robust financial health with an exceptional gross margin of 89.25% and steady revenue growth of 10.63% over the last twelve months. For deeper insights into Adobe’s financial metrics and growth potential, InvestingPro offers comprehensive analysis with 12+ additional key insights.
Adobe reaffirmed its full-year annual recurring revenue (ARR) growth target of 11%, which UBS noted was in line with expectations.
UBS observed that Adobe’s outlook for just 9-10% revenue growth and year-over-year declines in net new ARR is not serving as a catalyst for the stock.
The firm indicated that investor interest is shifting toward infrastructure and data software companies that are experiencing more tangible artificial intelligence-related growth benefits.
In other recent news, Adobe has reported second-quarter results that surpassed analyst expectations, with total revenue reaching $5.87 billion, exceeding the consensus estimate of $5.80 billion. Mizuho noted Adobe’s Digital Media annual recurring revenue (ARR) grew 12% year-over-year on a constant currency basis, and the company has raised its revenue and earnings per share outlook. Meanwhile, Stifel highlighted Adobe’s standalone AI ARR is exceeding expectations, tracking ahead of its $250 million end-of-year target. Despite lowering its price target to $480, Stifel maintained a Buy rating, indicating confidence in Adobe’s long-term prospects.
RBC Capital reaffirmed its Outperform rating on Adobe, emphasizing the company’s solid performance across key metrics and its capabilities in automation. BMO Capital also maintained its Outperform rating, noting Adobe’s stronger revenue results and raised guidance. KeyBanc reiterated its Sector Weight rating, pointing to optimism about Adobe’s Creative Cloud pricing changes and AI monetization. However, KeyBanc expressed some concerns about growth drivers beyond price increases. Adobe’s strategic roadmap and demand generation initiatives continue to receive positive outlooks from analysts, despite competition in the generative AI space.
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