Adobe CEO Shantanu Narayen speaks in an interview with CNBC at the New York Stock Exchange on February 20, 2024.
Brendan McDermid | Reuters
adobe Shares fell 13% on Thursday, their biggest drop since March, after the software vendor issued disappointing revenue guidance.
In the fourth quarter, Adobe said fiscal first-quarter sales would be between $5.63 billion and $5.68 billion. earnings report late Wednesday. Analysts on average expected revenue of $5.73 billion, according to LSEG.
Analysts at TD Cowen downgraded the stock to hold from buy, while Wells Fargo maintained a buy rating after the company experienced a “dismal 24 years.” The stock has fallen 20% this year, lagging badly behind the Nasdaq, which has gained 33% and topped the 20,000 mark for the first time on Wednesday.
While Adobe’s forecast lagged expectations, the company’s fourth-quarter results beat expectations.
Adjusted earnings per share were $4.81, higher than analysts’ average estimate of $4.66, according to LSEG. Fourth-quarter revenue rose 11% to $5.61 billion, beating the average estimate of $5.54 billion.
Monetizing generative artificial intelligence, especially standalone products like Firefly image generation or other products in the Creative Cloud, has been core to Adobe’s growth strategy.
Analysts at Deutsche Bank maintained a buy rating but lowered their price target to $600 from $650.
“These results and guidance require some confidence for the full year next year,” the analysts wrote. Still, they said, “we see tangible evidence that Adobe is one of the few companies in our coverage that can succeed.” One of the application software companies monetizing generative artificial intelligence.”
watch: Adobe has the ability to improve its performance and market reach
