Shares of Adobe Inc (NASDAQ:ADBE) were falling on Friday, even after the company reported upbeat fiscal second-quarter results.
Here are some key analyst takeaways from the event:
- DA Davidson analyst Gil Luria reiterated a Buy rating, while cutting the price target from $300 to $250.
- RBC Capital Markets analyst Matthew Swanson maintained an Outperform rating, while reducing the price target from $350 to $285.
- TD Cowen analyst Derrick Wood reaffirmed a Hold rating, while lowering the price target from $285 to $245.
- KeyBanc Capital Markets analyst Jackson Ader reiterated an Underweight rating, while slashing the price target from $235 to $195.
- BTIG analyst Nick Altmann maintained a Neutral rating on the stock.
- Citizens JMP Securities analyst Patrick Walravens reaffirmed a Market Outperform rating.
Check out other analyst stock ratings.
DA Davidson: Adobe’s total revenues grew 13% year-on-year to $6.618 billion, beating the consensus of $6.450 billion, Luria said in a note. The results suggested that the company is ramping up the monetization of its AI tools, with:
- Firefly ARR (annual recurring revenue) is growing 50% sequentially to $300 million.
- AI-first ARR growing more than 300% year-on-year to surpass $500 million.
While management raised the midpoint of their full year revenue guidance to $26.55 billion, the increase of just $550 million reflects contributions from the recent Semrush acquisition, lowered individual subscription ARR expectations, and deferred creative cloud line optimizations, the analyst stated.
RBC Capital Markets: Although Adobe delivered solid results, the quarter was characterized by too many moving parts, Swanson said. Management raised its full-year total revenue guidance by $550 million, which is above the $280 million contribution from Semrush and the beat of $165 million delivered in the second quarter, he added.
The exit of CFO Dan Durn and concerns around the organic ARR guidance exerted pressure on the stock, the analyst sated. Durn’s departure follows last quarter’s announcement of CEO Shantanu Narayen leaving the company, he further noted.
TD Cowen: While Adobe’s 3% decline in organic NNARR (net new annual recurring revenue) came in line with Street expectations and marked an improvement from the previous quarter’s 11% contraction, it was still in the negative territory, Wood said.
Management reiterated their fiscal 2026 ARR growth guidance of 10.2%, but this includes a Semrush contribution of around $500 million, the analyst noted. This essentially lowers organic ARR guide by around the same amount, he added.
Wood lowered the organic NNARR growth forecast for the year from +1% to -18% and total ARR growth from 10.2% to 8.2%.
KeyBanc Capital Markets: Adobe reported its revenues $163.0 million higher than the midpoint of its guidance, Ader said. Non-GAAP operating margin came in-line with guidance at 44.5% and management reiterated their full-year outlook of 45.0%, he added.
The midpoint of the GAAP earnings guidance for fiscal 2026 was lowered to $17.95 per share, from the prior outlook of $18.00 per share. While Adobe continues to see success in its AI products, the stock could “lag the sector” as the company is on the lookout for both a CEO and CFO, he further noted.
BTIG: Adobe’s ARR grew 12.5% year-on-year to $27.10 billion, including a contribution of around $480 million from the Semrush acquisition, Altmann said. On an organic basis, ARR growth of 10.5% marked a deceleration of around 40 basis points (bps) from the previous quarter, he added.
The encouraging signs was that AI-First ARR surpassed $500 million and Firefly ARR reached around $300 million, the analyst stated. He noted, however, that the company maintained its 10.2% ARR outlook for fiscal 2026 “despite Semrush now being included in the framework (leading us to lower our organic ARR estimate ~200bps),” he further wrote.
Citizens JMP Securities: Adobe announced mixed results for the quarter, Walravens said. While non-GAAP earnings of $5.96 per share topped expectations of $5.82 per share, gross margin of 89.2% and operating margin of 43.0% missed consensus estimates of 89.8% and 44.5%, respectively, he added.
The analyst stated that Adobe continues to “see encouraging traction” in its newer AI products, with:
- Acrobat and Express MAU (monthly active users) crossing 850 million
- Creative freemium MAU above 90 million
- Firefly ARR approaching $300 million
The company pursuing its freemium strategy “more aggressively” is creating near-term pressure on ARR, and its guidance “continues to imply moderation in the back-half,” he further wrote.
ADBE Price Action: Adobe shares were down 7.24% at $202.95 at the time of publication on Friday. The stock is trading at a new 52-week low, according to Benzinga Pro data.
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