Adobe (NASDAQ:ADBE) shares fell around 2% intra-day today after Citi analysts reduced the price target for the stock to $490 from $551 while maintaining a Neutral rating, citing concerns over potential near-term headwinds in the company’s growth trajectory.
The analysts expressed caution ahead of Adobe’s fiscal Q1 earnings report on March 12, noting weaker outlooks from CRM and other front-office software providers. While Adobe’s valuation appears less demanding compared to its large-cap peers, uncertainties surrounding pricing dynamics and paid user acquisition remain key factors to watch.
Recent price adjustments to flagship applications could support revenue growth, but softer Creative Cloud web traffic suggests challenges in attracting new paid users. As a result, Adobe’s shares may continue to trade within a narrow range until the company demonstrates stronger net new annual recurring revenue (NNARR) trends and clearer monetization of generative AI initiatives.
The revised price target reflects slightly lowered earnings estimates and a reduced valuation framework, with an implied 24.6x enterprise value to free cash flow multiple, compared to 33x for large-cap tech peers. Investors are likely to seek more substantial AI-driven revenue growth before sentiment around Adobe meaningfully improves.