ADBE Stock Hits 1-Month Low Ahead Of Earnings – Analysts Look For Clarity On Freemium Strategy

Adobe shares traded in the red for the fourth straight session on Thursday, hitting lows last seen in early August.

• Wall Street is expecting Adobe to report earnings per share of $6.09 on revenue of $6.7 billion.
• Earlier this week, both Stifel and Mizuho raised their price targets on ADBE shares but maintained cautious ratings.
• Both cited developments around Adobe's freemium pivot and roadmap for AI as factors that could shape the outlook.

Adobe (ADBE) shares fell for a fourth straight session Thursday, hitting a more than one-month low ahead of the software company’s fiscal third-quarter earnings report after market close.

The decline comes despite fresh price-target increases from Wall Street this week, with Stifel and Mizuho both raising their targets while maintaining cautious ratings on the stock.

ADBE stock fell as much as 1.35% in midday trade, extending its slide from Friday, and trading at levels last seen in the beginning of August. Wall Street is expecting the global technology company to report earnings per share (EPS) of $6.09 on revenue of $6.7 billion.

Stifel Says Outlook Depends On Several Factors

In a note to investors cited by TheFly, Stifel analyst J. Parker Lane raised the firm’s price target to $225 from $200 and kept a ‘Hold’ rating. The analyst said Adobe shares have rebounded 33% from their year-to-date lows heading into fiscal Q3, leaving a balanced risk/reward profile.

Lane pointed to several factors that could shape the outlook, including the executive transition, Adobe’s acceleration of its freemium strategy and changes in the competitive landscape driven by artificial intelligence. 

Mizuho Sees Solid Checks But Limited Visibility

Mizuho also raised its price target to $260 from $245, while maintaining a ‘Neutral’ rating. The firm said investor sentiment remains negative but has improved following Adobe’s 38% rebound from its late-June trough.

Mizuho said its channel checks were solid during the quarter, with Adobe’s web traffic showing meaningful improvement for a second consecutive quarter.

The firm also stated that it expects Adobe’s guidance to be beatable, although visibility remains limited. Mizuho cited uncertainty around the company’s recent freemium pivot and deferred Creative Cloud line optimizations.

How Retail Feeling About ADBE Stock Ahead Of Earnings?

On Stocktwits, retail sentiment around ADBE rose to ‘extremely bullish’ from ‘bullish’ territory over the past day, accompanied by ‘high’ levels of chatter. 

One retail investor described Adobe as an undervalued company with a strong AI workflow position and pointed to the company’s growth and guidance.

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Another noted Adobe’s recently announced $25 billion share buyback authorization, stating that continued cash flow could support shareholder returns.

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The earnings report also comes shortly after a report from The Information said OpenAI had banned ads from Adobe and other competing AI image and audio products on ChatGPT.

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