TLDR
- Adobe (ADBE) stock gained 0.7% premarket ahead of Q3 fiscal 2025 earnings report scheduled for Thursday
- Wall Street expects $5.18 earnings per share and $5.91 billion revenue, up from prior year figures
- Company launched general availability of AI agents this week, with Stifel maintaining Buy rating at $480 target
- Stock dropped 21% this week despite broader tech market gains, analysts cut price targets but remain optimistic
- Retail sentiment extremely bullish on Stocktwits as traders eye potential recovery from oversold levels
Adobe shares climbed in Thursday premarket trading as investors positioned ahead of the company’s third-quarter earnings report. The 0.7% gain provided some relief after a challenging week that saw the stock tumble over 21%.
Wall Street analysts project adjusted earnings of $5.18 per share for the quarter. Revenue expectations stand at $5.91 billion, marking increases from the year-ago period’s $4.65 EPS and $5.41 billion in sales.
The premarket strength followed continued momentum from Adobe’s AI agent rollout. The company announced general availability of multiple artificial intelligence tools this week, building on its March Adobe Summit presentation.
AI Strategy Drives Analyst Confidence
Stifel maintained its Buy rating and $480 price target following the AI agent announcement. Analyst Parker Lane sees potential for monetizing automation capabilities within the Digital Experience business segment.
The latest rollout includes agents first unveiled at Adobe Summit in March. The company previously launched its Data Insights agent and Product Support Agent in June as part of a planned 10-agent suite.
Adobe’s gross margins of 89% provide strong fundamentals for growth investments. The company maintains revenue growth near 11% while expanding its AI capabilities across multiple product lines.
Stifel views Adobe as still in early stages of its AI strategy implementation. However, the firm considers the general availability announcement a positive step for future growth prospects.
Analyst Downgrades Despite Optimism
Multiple Wall Street firms reduced price targets ahead of earnings while maintaining positive ratings. Oppenheimer cut its target to $460 from $500 but kept an Outperform rating.
RBC Capital lowered its target to $430 from $480. Mizuho Securities dropped theirs to $460 from $530. UBS made the largest reduction, cutting to $400 from $430.
Oppenheimer analyst Brian Schwartz noted low expectations entering the earnings report. He highlighted Adobe’s valuation reflecting negative sentiment, with multiples at five-year lows.
The analyst expects limited material disclosures in Thursday’s report. Adobe typically reserves major announcements for its MAX customer conference in October.
Deutsche Bank holds a $475 target with a Hold rating. TD Cowen maintains Hold at $470, citing mixed survey results and declining credit card data growth.
Retail investors on Stocktwits showed extremely bullish sentiment at 91 out of 100. Message volume reached extremely high levels as earnings approached. One trader asked if the stock could reach $500, while another reported taking a position hoping for an earnings-driven reversal.
Adobe closed Wednesday at $350.16, down 1.10%. The stock trades with a PEG ratio of 0.54, suggesting potential undervaluation relative to growth expectations.
