Adobe (ADBE) reported solid fiscal Q4 results but its fiscal 2026 guidance continues to reflect a decelerating growth trend, Morgan Stanley said in a report Thursday.
The report said the results were solid, with revenue, margins and Digital Media net new annualized recurring revenue beating consensus. It also pointed to compounding GenAI adoption.
But its annualized recurring revenue guidance implied about 10.2% growth for fiscal 2026, below the 11.5% Q4 exit rate, the note said, adding that its revenue outlook was largely in-line.
"Despite significant portfolio expansion for AI capabilities and early shift to monetization, investors likely need firmer evidence of a growth re-acceleration and/or material positive revisions to
the forward outlook to ease concerns on AI competition," it said.
Morgan Stanley said valuation remains undemanding but it kept the stock at equal weight awaiting "greater" conviction in growth outlook. It cut its price target to $425 from $450.
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