Adobe continues dip as analysts downgrade on Figma deal uncertainty
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Adobe (NASDAQ:ADBE) shares fell another 3% in Friday's pre-market hours as several analysts cut ratings in response to the software firm's mixed outlook and $20B Figma deal.
Along with announcing its third quarter results, Adobe (ADBE) said on Thursday that it would acquire collaborative design platform developer Figma for $20B.
Oppenheimer analyst Brian Schwartz cut his rating on the firm to perform from outperform stating that Adobe overpaid for Figma. "The high price tag indicates it was a defensive move, and the deal adds another layer of execution risk over the next few quarters, " Schwartz added.
Barclays downgraded the stock to equal-weight from overweight, pushing down its price target to $340 from $440, while noting that the Figma deal - with half of its purchase price funded by stocks - could push out EPS path for a year. The deal also "makes it hard to argue for multiple expansion."
BofA Securities called the Figma deal a positive, but also warned that it "represents an overhang until deal close and the value of such a large acquisition (14% of market cap) becomes more clear." The bank also downgraded Adobe (ADBE) to Neutral and lowered its PT to $350 from $450 citing deal uncertainty.
Credit Suisse, meanwhile, lowered its PT to $350 from $425 while maintaining its Neutral rating. It also revised its estimates on the company, now expecting FY2022/FY2023 revenue of $17.6B/19.7B and EPS of $13.62/15.94. It previously expected $17.66B/19.93B in revenue and $13.51/16.10 in EPS.
SA Quant system rates Adobe (ADBE) as Hold, while SA Authors' rate it as Buy.

The shares of the creative software company have eroded ~54% over the past year