Jefferies Raises Adobe PT to $700, Downplays Weak 2024 Guidance
Analysts at Jefferies raised their price target on Adobe stock to $700 despite soft 2024 guidance.
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Shares of Adobe (NASDAQ: ADBE) opened 6% lower on Thursday after the company issued worse-than-anticipated guidance for fiscal 2024, offsetting the positives from the strong Q4 2023 performance. Despite a weaker outlook, analysts at Jefferies remain bullish on Adobe, hiking their price target on the stock by over 6%.
Jefferies Bullish on Adobe Firefly Adoption
Adobe offered somewhat conservative guidance for fiscal 2024. However, Wall Street analysts remained bullish on the software maker’s stock despite a weaker-than-expected outlook.
Jefferies strategists reaffirmed their ‘buy’ rating on Adobe’s shares and hiked their price target from $660 to $700, implying a potential upside of more than 20% from the current share price. The move came a day after Adobe’s earnings results for Q4 2023, which the analysts described as “the usual conservative start to a new financial year.”
‘Targets for 2024 disappointed high expectations, sending the stock down 5% after the close, but Adobe has a history of conservative ARR (annualized recurring revenue) targets.”
– Jefferies wrote in the note.
Adobe has been consistently issuing cautious initial targets at the start of a new fiscal year, and it should be the same case for 2024, the brokerage firm said, highlighting several bullish factors related to the adoption of the company’s generative AI offering, Firefly. The company’s shares surged over 70% this year amid intense interest in AI features.
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Adobe Beats Q4 Estimates But Shares Tumble on Soft 2024 Guidance
While Adobe’s Q4 2023 earnings and revenue exceeded expectations, the tech company’s soft guidance for fiscal 2024 triggered a sell-off, sending its shares tumbling 6% at the market open on Thursday.
The company reported fourth-quarter adjusted earnings per share (EPS) of $4.27, topping the consensus estimates of $4.14. Revenue reached $5.05 billion, up 12% from a year ago and above the projected $5.03 billion.
Net income stood at $1.48 billion in the three-month period, up 26% from last year’s same quarter.
Adobe expects fiscal 2024 EPS to be $17.60 to $18. The midpoint of that guidance was below the $18 expected by Wall Street analysts. Also, revenue is anticipated to land between $21.3 billion and $21.5 billion, missing the consensus estimates of $21.73 billion.
Anil Chakravarthy, president of Adobe’s experience business, reiterated the company’s plans to remain cautious with spending. Meanwhile, the company is expecting a decision soon from the US regulators regarding its pending acquisition of interface design platform Figma.
Do you agree with analysts’ views that Adobe is well-positioned to continue its current momentum despite a cautious 2024 guidance? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
