Adobe CEO Shantanu Narayen speaks during an interview with CNBC on the ground of the New York Stock Exchange in New York, February 20, 2024.
Brendan McDermid | Reuters
the corporate’s shares fell 13% Friday morning after the corporate reported first-quarter results that beat estimates but provided a slim quarterly revenue forecast.
The design software company reported adjusted earnings per share of $4.48, higher than analysts’ expectations of $4.38, in line with LSEG, formerly generally known as Refinitiv. Its revenue of $5.18 billion topped analysts’ estimates of $5.14 billion.
Adobe expects adjusted earnings per share of $4.35 to $4.40 for the present quarter, while analysts expected $4.38. It said revenue can be between $5.25 billion and $5.30 billion, barely below the $5.31 billion estimate. The company also announced a $25 billion share buyback.
Adobe also recently launched an AI assistant for Reader and Acrobat that can assist users process information from long PDF documents.
Bank of America analysts lowered their price goal on Adobe shares to $640 from $700 and maintained a buy rating on the stock, expressing optimism about Firefly, the corporate’s AI image generation tool.
“We remain unchanged in our view that Adobe is a primary beneficiary of artificial intelligence,” the analysts wrote in a note to investors on Thursday. “Although monetization growth has been slower than expected, Firefly is one of the [most] “widely applicable generative AI offerings, with the potential for multiple monetization paths.”
Barclays lowered its price goal on Adobe shares to $630 from $700, while maintaining an overperform rating on the stock. Analysts wrote Friday that they expect the stock market to get better and “will buy this decline as prices mask Creative Cloud’s strength.”
Analysts at Morgan Stanley maintained an “overweight” rating and $660 price goal for Adobe shares, writing Friday that “more patience is likely warranted.”
“Digital Media Net New ARR’s lower-than-expected performance likely increases investor concerns about competitive pressures,” analysts wrote. “However, GenAI’s growing number of monetization vectors and new revenue-generating solutions coming online in the second half of 2024 should help improve the narrative going forward.”
