From Nasdaq: 2024-11-21 11:34:00

Adobe (ADBE) shares have declined 19.4% in the past 12 months, underperforming the Computer & Technology sector by 32.9% and the Computer Software industry by 16.9%. The challenging macroeconomic environment and competition in the Gen AI space have impacted ADBE. However, strong demand for its products is expected to boost growth.

Adobe is benefiting from the momentum in its Gen AI models, such as Firefly, which has generated 13 billion images and is being adopted rapidly by leading brands. The introduction of new Firefly models enhances creative control and quality, driving positive results for Adobe. The recent launch of Firefly Video model and integrations have been successful, exceeding 12 billion generations.

Adobe’s enhanced Acrobat AI Assistant features, integration of Firefly image generation, and Generative Remove tool in Lightroom have been well-received. The company’s expansion in content creation, introduction of Adobe Express Platform AI Assistant, and Firefly Image Model 3 for enterprises have further strengthened its position in the market.

A strong clientele, including notable names like IBM, Johnson & Johnson, and Google’s Alphabet, is driving Adobe’s growth. The company expects total revenues for Q4 2024 between $5.50 billion and $5.55 billion, with Digital Media revenues projected at $4.09 billion to $4.12 billion. ADBE also anticipates non-GAAP earnings between $4.63 per share and $4.68 per share.

For 2024, the Zacks Consensus Estimate for ADBE’s earnings is $18.28 per share, reflecting 13.75% year-over-year growth. The revenue estimate is $21.44 billion, indicating 10.46% growth over 2023. Q4 2024 earnings and revenues are expected to see 9.13% and 9.71% year-over-year growth, respectively.

Despite positive prospects, Adobe stock is trading at a premium, with a Value Score of D and a higher Price/Sales ratio than the industry average. However, the company’s focus on GenAI and innovative portfolio presents a compelling opportunity for investors. ADBE currently holds a Zacks Rank #2 (Buy) recommendation.



Read more at Nasdaq: 3 Reasons Adobe Stock is a Buy Despite a 19% Decline in a Year