Adobe Downgraded Despite AI Updates. The Stock Drops. — Barrons.com
By Angela Palumbo
Adobe stock was down Monday after a Mizuho analyst downgraded shares of the creative software company, citing concerns that growth will remain pressured due to continued competitive pressures.
Gregg Moskowitz downgraded shares of Adobe to Neutral from Outperform and cut his price target to $270 from $315 on Monday. He wrote in a research note that even though the company responsible for Photoshop and Lightroom has expanded artificial intelligence capabilities and monetization opportunities, risks remain.
"ADBE's consumer and SMB-centric [small and medium business-centric] tiers, which we estimate at >65% of total ARR [annual recurring revenue], face intensifying competition from AI-native platforms and low-cost design tools," Moskowitz wrote.
Barron's has reached out to Adobe for comment. The stock dropped 2.2% to $240.16 on Monday.
Moskowitz's downgrade comes after shares of Adobe have fallen 31% this year. Many on Wall Street are worried that AI capabilities could eventually replace software offerings. Adobe is also dealing with competition from other tech companies releasing their own creative software, like Apple.
Adobe tried to assuage some concerns last week when it released an AI agent platform called CX Enterprise, which is designed to help companies boost sales, improve customer experience, and quicken time-intensive tasks. Adobe stock rose 1.7% following the announcement of that platform.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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