Adobe CEO Shantanu Narain speaks during an interview with CNBC on the floor at the New York Stock Exchange in New York City, February 20, 2024.
Brendan McDiarmid | Reuters
Adobe Shares fell 13% on Friday morning after the company reported first-quarter results that beat estimates but provided a slight forecast for quarterly revenue.
The design software company reported adjusted earnings per share of $4.48, above analysts' expectations of $4.38, according to LSEG, formerly known as Refinitiv. Its revenue of $5.18 billion beat analysts' estimates of $5.14 billion.
For the current quarter, Adobe expects adjusted earnings per share of $4.35 to $4.40, while analysts were expecting $4.38. It said total revenue would be $5.25 billion to $5.30 billion, slightly less than the estimated $5.31 billion. The company also announced a $25 billion stock buyback.
Adobe also recently launched an AI assistant for Reader and Acrobat that can help users digest information from long PDF documents.
Bank of America analysts lowered their price target on Adobe shares to $640 from $700 and affirmed a buy rating on the stock, expressing optimism about Firefly, the company's AI-generated image creation tool.
“There is no change in our view that Adobe is a major beneficiary of AI,” the analysts wrote in a note to investors on Thursday. “Although the monetization path is slower than expected, Firefly is one of the (most) widely used generative AI offerings, with the potential for multiple paths to monetization.”
Barclays cut its price target on Adobe shares to $630 from $700 while maintaining an overweight rating on the stock. Its analysts wrote Friday that they expect the stock to recover and “will buy this dip as pricing hides the underlying strength in Creative Cloud.”
Analysts at Morgan Stanley maintained their overweight rating and $660 price target on Adobe stock, writing on Friday that “more patience is likely warranted.”
“The lower-than-expected outperformance in Digital Media Net New ARR is likely to heighten investor concerns about competitive pressures,” the analysts wrote. “However, the growing number of vectors for GenAI monetization and new monetizable solutions that will come online in 2H24 should help improve the narrative going forward.”
— CNBC's Jordan Novet contributed to this report.
