In addition, Adobe expects fourth-quarter revenue of about $4.52 billion, lower than the consensus estimate of $4.6 billion; non-GAAP earnings per share of about $3.50, higher than the consensus estimate of $3.47.
Also on Thursday, Adobe agreed to buy Figma for about $20 billion in cash and stock. The deal, which consists of roughly half cash and half stock, is subject to customary adjustments, according to a statement. The transaction is expected to close in 2023. The deal will dilute Adobe’s non-GAAP earnings per share in the first and second years following the closing, with an expected breakeven in the third year and growth by the end of the third year.
Here’s what some of Wall Street’s biggest names are saying about the stock:
Barclays lowered Adobe’s rating from “overweight” to “wait-and-see”, and the target price was lowered from $440 to $340.Barclays noted that Adobe’s acquisition of Figma could dilute its earnings per share within a year, and that the deal also “makes the case for multiple expansion difficult to tenure.”
Bank of America lowered Adobe’s rating from “buy” to “neutral” and lowered the target price to $350 from $450.Bank of America noted that Adobe’s acquisition of Figma is a good long-term deal, but “has a pitfall” in the short-term. “Until the value of such a large acquisition becomes clearer, this is an open deal,” the bank warned, adding that the three-year growth cycle showed little near-term operating income synergies.
Deutsche Bank lowered its price target on Adobe to $400 from $500, maintaining a “buy” rating on the stock.Deutsche Bank said the negative market reaction showed concern about Adobe’s core creative business given the timing and price of the Figma acquisition. However, Deutsche Bank also said it believed in the strategic basis of the deal and Adobe’s ability to execute.
Piper Sandler lowered his price target on Adobe to $358 from $430, maintaining an “overweight” rating on the stock.The bank is optimistic about Figma’s mid- to long-term prospects for cross-selling to a wider range of Adobe customers, and lowered its target price to indicate a high premium to the $20 billion acquisition price.
Morgan Stanley lowered its price target on Adobe to $337 from $362, maintaining a “wait-and-see” rating on the stock.Morgan Stanley agreed with Adobe management that Figma is a “differentiating quality asset,” but the acquisition of an emerging competitor “raises potential investor concerns about the company’s organic growth and near-term margin dilution.” Impact”.
Stifel lowered its price target on Adobe to $375 from $500, maintaining a “buy” rating on the stock.The bank said Adobe’s $20 billion acquisition of Figma “does indicate that the company is aware of the technology gap and competitive pressure from companies such as Figma and Canva. In the long term, acquiring a competitive The adversary’s decision is a net gain for Adobe, but a deal of this magnitude could weigh on the stock in the near term.