Adobe (ADBE) Downgraded as Analysts See Limited Near-Term Catalysts

Adobe Inc. (NASDAQ:ADBE) is one of the AI Stocks Investors Are Watching Closely. On January 9, BMO Capital downgraded the stock to Market Perform from Outperform and also reduced its price target to $375 from $400. The rating downgrade is driven by limited catalysts for Adobe and firm belief that shares will remain range-bound amid increasing competition.

"We believe that Adobe's valuation is attractive though faces greater competitive threats in the creative market and thus remains at the bottom of our pecking order in the front office market.” -BMO analysts, led by Keith Bachman, in a Friday investor report.

BMO Capital has flagged competition for Adobe in the creative market, particularly among small businesses, students, and freelancers. More than 50% of students surveyed in the seventh instalment of its proprietary Creative Cloud survey are using rival Canva over Adobe, while an estimated 50% of freelancers are using Canva compared to about 10% using Adobe.

“While Adobe’s current valuation is undemanding, we do not envision positive catalysts and think the shares will remain range-bound. Net, we are downgrading Adobe to Market Perform and lowering our price target to $375. No changes to our estimates. In the front office application sector, we prefer Salesforce (CRM; $266.12; OP) and HubSpot (HUBS; $398.22; OP) over Adobe.”

Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions.

While we acknowledge the potential of ADBE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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