Analyst cites acquired growth and weakened pricing power in AI-driven creative tools as key downgrade factors.
Freedom Broker downgraded Adobe (NASDAQ:ADBE) to Hold from Buy and reduced its price target to $250 from $510 after the company’s second-quarter earnings. The analyst noted the acceleration in growth was acquired rather than organic, with management prioritizing top-of-funnel reach over near-term subscription revenue.
Adobe reported record Q2 revenue of $6.62 billion, up 13% year-over-year from $5.87 billion. GAAP net income reached $1.71 billion, while non-GAAP net income was $2.40 billion. UBS also lowered its price target to $225 from $260, maintaining a Neutral rating due to concerns over pricing power in the creative AI segment.
The company plans to expand its freemium AI offerings to boost user adoption, addressing challenges in the down-market and individual customer segments.