Adobe (NASDAQ:ADBE)
Wells Fargo Securities has increased its price objective for Adobe (NASDAQ:ADBE) to $525, up from the previous price goal of $420. Adobe stock was upgraded to Overweight from Equalweight.
Wells Fargo Analysts said that the AI argument is still driving Adobe. Adobe sees more break-out possibilities as products are monetized, which is why Gen AI is a tailwind for the company. Adobe expects established platforms to get most of the early value and sees an opportunity for future break-out.
On Thursday, Adobe announced the availability of Sensei GenAI, a generative artificial intelligence tool, across all corporate apps that are part of the Adobe Experience Cloud. The firm, headquartered in San Jose, California, has also unveiled Firefly. This new service is designed to assist businesses in streamlining, advancing, and cost-effectively managing their content supply chain.
According to the company, the intensity of the competitive environment is easing after a difficult year for two reasons: 1) Firefly presents a much-required next act for Adobe plus a natural extension of the company’s entrenched position within digital media, and 2) the current environment is a consolidators’ market, as corporations aim to do more with less across IT.
The analysts believe this provides additional opportunities for Adobe’s DM and DX platforms at the cost of developing market-tech competitors and point solutions.
The company believes that Gen AI will likely be a driving force behind content expansion. As the firm strives to establish itself as a trusted partner, industry observers believe Adobe is in an excellent position to reap the benefits of early corporate adoption.
The company believes that Firefly offers pricing power for DM and an underestimated boost to DX in light of the anticipated explosion of content. Furthermore, the company considers marketing and design an excellent candidate for early adoption of Gen AI.
In a market that is becoming more segmented, analysts believe that Adobe’s profile stands out positively due to its profitability measures, which support the valuation. Additionally, the possibility of an AI-enabled product cycle tailwind emerging provides the prospect for further recovery or/and outperformance.
Premarket trading on June 9 saw Adobe stock gain 3.8% to $455.71.
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