TLDR
- Adobe stock dropped to a 52-week low of ~$230 on Thursday, down ~34% over the past year
- Citi cut its price target from $287 to $253, maintaining a Hold rating
- CEO Shantanu Narayen announced plans to step down after nearly two decades
- Adobe settled a subscription practices lawsuit for $150 million; UK regulators are reviewing similar concerns
- Despite the pressure, Q1 FY26 earnings beat estimates — EPS of $6.06 vs. $5.87 expected
Adobe (ADBE) stock dropped to a 52-week low of around $230 on Thursday, extending a slide that has now erased about 34% of the stock’s value over the past year. The stock continued falling in early Friday trading.
The pressure comes from several directions at once — AI competition, a leadership change, regulatory headwinds, and now a fresh downgrade from Citi.
Citi cut its price target on Adobe to $253 from $287, while keeping a Hold rating. The bank cited a lack of near-term catalysts and flagged growing concern that AI disruption could weigh on the stock over the coming year.
The downgrade is part of a broader move — Citi also lowered targets on five other software firms as fears over AI disruption wiped out nearly $1 trillion in sector value.
Anthropic’s Project Glasswing, an AI initiative backed by major tech partners, added to the anxiety. The project features a model that can autonomously identify security vulnerabilities, rattling traditional software and cybersecurity names.
CEO Exit Adds to the Uncertainty
Longtime CEO Shantanu Narayen announced plans to step down after nearly 20 years at the helm. He was the architect of Adobe’s shift to the cloud — a move that defined the company’s last decade of growth.
The timing is awkward. Adobe is in the middle of navigating one of the biggest technology shifts in its history, and investors now have to factor in a leadership void on top of everything else.
Tools like Canva and Figma are gaining ground with AI-powered features, attracting users who don’t need Adobe’s full suite. That’s put Adobe’s pricing power under the microscope.
The concern isn’t just competition — it’s that AI is lowering the barrier to entry in creative software, making it easier for cheaper alternatives to chip away at Adobe’s user base.
Legal and Regulatory Pressure
Adobe recently agreed to a $150 million settlement over its subscription cancellation practices. UK regulators are now reviewing similar concerns, adding another layer of uncertainty to the revenue model.
That said, Adobe’s latest numbers were solid. Q1 FY26 earnings came in at $6.06 per share, beating the $5.87 estimate. Revenue rose 12.1% year-over-year to $6.4 billion, also ahead of the $6.28 billion forecast.
Narayen noted that Adobe’s AI-first annual recurring revenue more than tripled year-over-year — a data point bulls will point to as evidence the company’s AI push is gaining traction.
Wall Street’s consensus sits at Hold, based on nine Buys, 14 Holds, and three Sells over the past three months. The average price target of $319.38 implies upside of roughly 39% from current levels.
Citi’s revised target of $253 sits well below that average, reflecting a more cautious near-term view on the stock.
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