Citi analyst Tyler Radke has lowered the price target for Adobe stock (NASDAQ: ADBE) to $430 from $490, maintaining a Neutral rating. The adjustment follows the company’s first-quarter earnings, which Radke labeled “controversial.”
While Adobe posted a modest earnings beat, the results were overshadowed by changes in disclosure practices that now obscure the momentum of its core Creative Cloud suite. Despite these concerns, the company posted strong gross profit margins of 89% and maintained moderate debt levels. However, Adobe saw a decline in combined Remaining Performance Obligations (cRPO/RPO) bookings for the first time in years.
Although Adobe (NASDAQ: ADBE) surpassed some financial metrics, it did not update its fiscal year 2025 outlook. The second-quarter guidance revealed a slight miss in Digital Experience (DX) subscription growth. Radke noted that the stock’s negative reaction may reflect growing uncertainty about Adobe’s near-term growth prospects, which hinge on its AI-driven strategy and efforts to upsell enterprise customers across its cloud offerings in a challenging macroeconomic environment.
Radke also pointed to signs of a slowdown in Adobe’s Creative Cloud franchise, which faces heightened competition. The new $430 price target reflects slightly lowered estimates and is calculated using a 19 times fiscal year 2025 estimated enterprise value to free cash flow (EV/FCF) multiple.
