Bank of America Analyst Raises Adobe's Price Target by 4.8% on Strong Q3 Results

By Don Francis, Editor
September 16, 2023 11:23 AM UTC
Bank of America Analyst Raises Adobe's Price Target by 4.8% on Strong Q3 Results

Bank of America's Brad Sills raised their price target on Adobe (NASDAQ: ADBE) by 4.8% from $630 to $660 on 2023/09/15. The analyst maintained their Strong Buy rating on the stock.

Sills' price target increase comes after Adobe delivered "strong" Q3 results and raised its Q4 guidance "across almost all metrics," according to the analyst's assessment of the company's Q3 2023 earnings report released on September 14, 2023.

In particular, management's "strong" guidance for Q4 Digital Media Annual Recurring Revenue (ARR) implies "little negative impact" from the recent 6% to 10% price increase on Creative Cloud, as detailed by Sills.

The analyst also predicted that the new pricing strategy will likely push the Street's "conservative" FY 2024 ARR growth estimate higher, given its impact on renewals.

Following Sills' update, other analysts also adjusted their price targets for Adobe on September 15, 2023. Here are the details:

- Citigroup's Tyler Radke raised their price target by 7% from $570 and maintained their Hold rating on the stock. - Baird's Rob Oliver raised their price target by 8% from $500 and maintained their Hold rating on the stock. - Barclays's Saket Kalia raised their price target by 3.2% from $620 and maintained their Hold rating on the stock.

Currently, 66.7% of top-rated analysts rate ADBE as a Strong Buy or Buy, while 33.3% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

According to the consensus forecast among analysts, Adobe's upcoming year is expected to deliver earnings per share (EPS) of $12.87. If these predictions hold true, ADBE's next yearly EPS will be up by 22.5% on a year-over-year basis.

Since Adobe's latest quarterly report on September 14, 2023, the stock price has declined by 4.2%. However, on a year-over-year basis, the stock has shown significant growth, up by 71.1%. During this period, Adobe has outperformed the S&P 500, which has risen by 14.1%.

As for Brad Sills, they are ranked by WallStreetZen in the top 4% out of 4,329 Wall Street analysts, with an average return of 15.3% and a 64.4% win rate. They specialize in the Communication Services, Healthcare, and Technology sectors.

Adobe Inc. is a global diversified software company operating across three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products and services that enable individuals, teams, and enterprises to create, publish, and promote content. Its flagship product is Creative Cloud, a subscription service that allows members to access creative products. The Digital Experience segment provides an integrated platform and applications for brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences. The Publishing and Advertising segment offers various products and services, including e-learning solutions, technical document publishing, web conferencing, and Advertising Cloud offerings. Adobe distributes its products and services through various channels, including direct sales, app stores, and its website.

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