Citi's downgrade of Adobe's shares from neutral to sell reflects concerns about the company's future growth trajectory. Analyst Tyler Radke highlighted that the incoming CEO, Anil Chakravarthy, will focus on strategic changes within Adobe's Creative business, which may negatively impact immediate growth prospects.
The price target for Adobe's stock has been reduced from $250 to $207, indicating a potential 16% decline from its recent closing price. Radke also pointed out that rising competition from AI-integrated software services and macroeconomic uncertainties could further complicate Adobe's growth path.
The firm anticipates that Adobe's annual recurring revenue (ARR) will grow at approximately 5% year over year through fiscal 2028, which is significantly lower than the consensus estimate by 200 to 300 basis points. This outlook contrasts with the broader analyst consensus, where 23 out of 39 analysts maintain a hold rating on the stock, while 10 recommend a buy.
Adobe's shares have already decreased by about 30% year to date, reflecting investor concerns about its performance