The Current Situation at Adobe
Adobe’s recent quarterly results present a paradox: while the company exceeds expectations, analysts are reacting with target price reductions. Here is a detailed analysis:
Current Quarterly Figures (Q1 2025)
Adobe reported a revenue of $5.71 billion (+11% year-over-year) for the quarter ending February 28, 2025, and a Non-GAAP EPS of $5.08, surpassing expectations. The Digital Media segment saw particularly strong growth with $4.23 billion (+12%).
Analyst Reactions and Price Targets
Despite the solid numbers, several institutions lowered their ratings:
- Morgan Stanley: Reduced target price from $600 to $510 (with an ‘Overweight’ rating)
- Goldman Sachs: Adjusted from $640 to $570 (‘Buy’ recommendation maintained)
These corrections indicate industry risks—such as general uncertainties in the software sector or concerns about the sustainability of AI-driven growth.
Market Reaction and Stock Performance
Adobe’s stock is currently trading at around €368, more than 30% below the all-time high of July 2024 (€533.50). Since the beginning of the year, it has lost over 14%, with the gap from the 200-day average (>20%) appearing technically alarming.
Upcoming Dates and Forecasts
According to financial calendars, the following releases are planned:
| Quarter | Estimated EPS | Date |
|---|---|---|
| Q2/2025 | ~$4.98 | June 12, 2025* |
| Q3/2025 | ~$5.11 | September 23, 2025* |
| Q4/2025 | ~$5.25 | December 11, 2025* |
(*estimated dates)
Critical Assessment
The apparent contradiction between strong fundamentals and analyst caution may have the following causes:
- Industry-Wide Hesitance: Sector risks such as volatile IT budgets or regulatory challenges for AI technologies.
- Valuation Issues: Despite revenue growth, high valuation multiples may create adjustment pressure.
The coming quarters will reveal whether Adobe’s AI products like Firefly are sustainable enough to counteract the skepticism—especially in light of rising EPS estimates for FY25/FY26.