Adobe rises as Mizuho upgrades ahead of Q3 results; Wall Street sees positives
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Adobe (NASDAQ:ADBE) shares rose nearly 1.8% in pre-market trading on Friday as Mizuho upgraded the creative software maker ahead of its third-quarter results next week.
Mizuho Securities analyst Gregg Moskowitz raised his rating on Adobe (ADBE) to buy from neutral and boosted his price target to $630 from $520, noting that it has seen web traffic continue to accelerate, with the expectations that the digital media segment will provide annual recurring revenue upside in both the third and fourth quarters.
Moskowitz also noted that the early reception to Firefly, Adobe's (ADBE) generative artificial intelligence product, has been "stronger than anticipated" and could result in it being a "significant" growth driver.
Firefly was unveiled in March at Adobe's annual summit.
A consensus of analysts expect Adobe (ADBE) to earn $3.97 per share on $4.87B in revenue for the coming quarter.
Barclays analyst Saket Kalia also raised his price target on Adobe (ADBE) going into the quarterly results, moving to $630 from $620. He also pointed strength in web traffic, which he said is "nearly" back to COVID levels.
Kalia is expecting 9% growth year-over-year in Digital Experience revenue and that partner checks came in better-than-expected, including more big deal activity, which could be the result of the company's generative AI push.
"[O]ur Firefly expectations are for $5-10 per user per month pricing for FireFly stand-alone, and think the Co-Pilot opportunity for the Photoshop FireFly beta could be $150-300M given the additional value," Kalia wrote in an investor note.
Kalia also said he expects Adobe's (ADBE) deal to acquire Figma will go through after seeing what happened with Microsoft and Activision.
T.D. Cowen analyst Derrick Wood also increased his price target, moving to $600 from $575, stating that his recent checks on Adobe (ADBE) have been "more mixed." However, there has been some bullish data points, especially with strength in digital, including Express.
"We remain excited about the emerging tailwinds GenAI is bringing and expect another solid upside qtr w/ new AI product releases around the corner," Wood wrote in an investor note.
Analysts are largely bullish on Adobe (ADBE). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ADBE a HOLD.