Adobe Stock Rises As Analyst Says Risk-Reward Has Improved Following Recent Underperformance: Retail Turns Upbeat

Adobe, Inc. ($ADBE) stock is poised to rise for a second straight session as it recovers from the 7% drop since the start of the new year. The most recent catalyst driving the upside could be a positive action from analysts at Exane BNP Paribas.

Exane BNP Paribas analysts upgraded Adobe stock to ‘Neutral’ from ‘Underperform,’ with a $425 price target, TheFly reported. The price target suggests the stock has merely 3% upside potential from current levels.

The analysts said the stock valuation now prices in Adobe’s near-term risk of rising competition from creative apps.

The firm said the risk/reward ratio has improved. It expects the stock to find near-term support as management addresses near-term concerns.

Adobe stock came under pressure in mid-December after the company issued sub-par guidance for the first quarter and the full year. However, the fourth-quarter results beat expectations.

Sell side is not too positive on the stock, with a Citi analyst stating in December the company’s core business faces continued revenue leakage, exacerbated by inclement macroeconomic conditions and competitive threats. 

ADBE sentiment and message volume January 15, 2025, premarket as of 6:14 am ET | Source: Stocktwits

On Stocktwits, retail sentiment toward Adobe improved to ‘extremely bullish’ (78/100) from ‘bullish’ a day ago, with message volume remaining ‘high.’

Following Tuesday’s 1.03% rise, a retail stock watcher flagged the $415 area as a long entry point.

Another said Adobe is highly shorted, and a tame consumer price inflation report could take the stock to $440. According to Nasdaq data, short interest in the stock was 8.59 million as of Dec. 31 and the days to cover is at1.89 days.

Adobe underperformed the broader market in 2024, ending the year down more than 25%. In premaket trading, the stock was up 0.63% at $415.31.

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