When you buy through affiliate links in our content, we may earn a commission at no extra cost to you. Learn Software giant Adobe (ADBE) has seen its stock price continue to rise – despite being accused by the US government of violating consumer protection laws.
The Federal Trade Commission is taking action against the company and two of its executives for allegedly deceiving customers.
But the legal wrangles haven’t yet negatively impacted the Adobe stock price, which has soared in the wake of record second-quarter revenues.
In our Adobe stock forecast 2024, 2025, and beyond, we explore the complaints leveled at the company, analyze its recent results and ask analysts what they expect to happen.
Key Takeaways
- Adobe was accused of violating consumer protection laws by the US government.
- The company was the best-performing S&P 500 stock in June, with a 24.9% rise.
- Adobe revealed a record second-quarter revenue of $5.31 billion, which was 10% higher year-over-year.
- Analysts believe the stock is a ‘moderate buy’ and predict the share price can rise.
- They have high expectations for Firefly, Adobe’s generative AI solution.
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Summary of the Latest Adobe Stock Predictions
| Adobe Stock Forecast
(as of July 10, 2024) |
1-Year Forecast | 2027 (January) | 5-Year Forecast
(July 2029) |
| MarketBeat | $607.67 | – | – |
| WalletInvestor | $579.38 | $579.97 | $597.97 |
| TipRanks | $614.33 | – | – |
| CoinCodex | $721.19
(January 2025) |
$1,170.78 | $2,421.71
(January 2030) |
Adobe Stock Analysis
A key part of our Adobe share price forecast is looking at how the company has performed over the past 12 months and whether this has been reflected in the share price.
In the case of Adobe, which is behind popular software such as Acrobat, Photoshop, and InDesign, it’s fair to say that the company and its stock had a rather interesting time.
The Adobe stock price has risen almost 14% over the past year from $496.35 to $566.02, as the stock market closed on July 9, 2024.
However, that only tells part of the story. The company’s 52-week high was $638.25, while its low was $433.97, according to MacroTrends.
As an aside, the all-time high Adobe stock closing price was $688.37 on November 19, 2021.
Better-than-expected second-quarter revenues have helped lift the stock in recent weeks despite the US government’s legal action.
In fact, Adobe was the best-performing S&P 500 stock in June, with a 24.9% rise, according to S&P Global. It stated:
“The company beat earnings expectations in its June 13 report and raised its earnings guidance, owing to what executives said was growth in its cloud products and AI adoption.”
The Latest Adobe News & Key Drivers to Consider
Here, we look at the latest Adobe news that has been impacting the ADBE price over the past couple of months.
US Government Legal Action
The Department of Justice filed a federal complaint against Adobe and two of its executives, Maninder Sawhney and David Wadhwani, in June 2024.
It accused them of failing to tell customers that by signing up for the ‘annual, paid monthly’ subscription plan they are agreeing to a year-long commitment and hefty termination fee.
According to Samuel Levine, director of the FTC’s Bureau of Consumer Protection, Adobe trapped customers through “hidden early termination fees” and numerous cancellation hurdles.
“Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel,” he said. “The FTC will continue working to protect Americans from these illegal business practices.”
However, Adobe has refuted the accusation.
In a statement, it insisted its subscription services were “convenient, flexible and cost-effective,” allowing users to choose which best meets their needs.
Dana Rao, General Counsel and Adobe’s Chief Trust Officer, said:
“Our priority is to always ensure our customers have a positive experience. We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process.”
Second Quarter Results
Of course, financial figures are vital to any Adobe stock forecast, and they have certainly brought some cheer to its nervous investors.
The company reported a record revenue of $5.31 billion for the second quarter of fiscal 2024, representing 10% year-over-year growth.
Its Digital Media segment revenue came in at $3.91 billion, which was 11% higher year-over-year, while Creative revenue rose 10% to $3.13 billion. Meanwhile, Document Cloud revenue enjoyed a 19% year-over-year increase to $782 million.
Shantanu Narayen, Adobe’s chair and CEO, attributed the result to strong growth across Creative Cloud, Document Cloud, and Experience Cloud.
“Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users,” he said.
Future Performance Targets
Adobe also published its third-quarter and full-year targets. Total revenue for the third quarter is expected to come in between $5.33 billion and $5.38 billion.
The following table summarizes Adobe’s third-quarter fiscal year 2024 targets:
| Total revenue | $5.33 billion to $5.38 billion |
| Digital Media net new ARR | ~$460 million |
| Digital Media segment revenue | $3.95 billion to $3.98 billion |
| Digital Experience segment revenue | $1.325 billion to $1.345 billion |
| Digital Experience subscription revenue | $1.20 billion to $1.22 billion |
| Tax rate | GAAP: ~18.0% ? ? Non-GAAP: ~18.5% |
| Earnings per share | GAAP: $3.45 to $3.50? Non-GAAP: $4.50 to $4.55 |
Over the full year, the company predicts revenue numbers between $21.40 billion and $21.50 billion.
| Total revenue | $21.40 billion to $21.50 billion |
| Digital Media net new ARR | ~$1.95 billion |
| Digital Media segment revenue | $15.80 billion to $15.85 billion |
| Digital Experience segment revenue | $5.325 billion to $5.375 billion |
| Digital Experience subscription revenue | $4.775 billion to $4.825 billion |
| Tax rate | GAAP: ~20.5% Non-GAAP: ~18.5% |
| Earnings per share | GAAP: $11.80 to $12.00 Non-GAAP: $18.00 to $18.20 |
Adobe Stock Forecast: Analysts’ Views
What are the analysts’ Adobe stock predictions? Are they positive or negative, and where do they expect the Adobe stock price to go?
According to Danni Hewson, head of financial analysis at AJ Bell, there’s a question mark over the company’s prospects because of the US government action.
She told Techopedia:
“The threat of potential fines over its cancellation policies and backlash from users over its new terms and conditions has subdued investor interest in a company ripe for riding the AI boom.”
Hewson also pointed out that while the subscription model was a “bone of contention” with the US Department of Justice, the longer-term prospects were crucial.
“It’s one of the company’s greatest strengths, and with its Firefly tool gaining user support, recurring revenue should begin to surpass investor expectations,” she said.
Looking ahead, Hewson doesn’t believe the journey will be smooth for any companies that are heavily involved in the developing AI world.
“There are a few issues to consider with every AI pick, not least further regulation and scrutiny of material used for learning,” she added.
Dan Romanoff, senior equity analyst at Morningstar, has raised his fair value estimate on ADBE to $635 per share on the back of its good second-quarter results.
“After last quarter’s big selloff, which we think was driven by disappointing net new annual recurring revenue, management also raised its full-year outlook for this metric,” he wrote in his Adobe stock forecast on June 14, 2024.
He pointed out that Firefly, Adobe’s generative AI solution, continues to “attract strong interest,” with nine billion generations so far.
Romanoff added:
“It is easy to see how Adobe Express and Firefly are widening the funnel for new customers, and we think this will bode well for growth over the next several years.”
Alibaba Stock Predictions: Where Will ADBE Stock Price Go Next?
Is Adobe a buy, hold, or sell? ADBE is rated as a ‘moderate buy,’ according to the views of 30 Wall Street analysts compiled by MarketBeat as of July 10, 2024.
However, opinions are divided. While 21 see it as a ‘buy’ and seven as a ‘hold,’ two have ‘sell’ recommendations in place.
Their consensus Adobe stock forecast 2025 is for the price to rise by a relatively modest 7.36% to $607.67 over the coming year, although ADBE predictions ranged from $450 to $730.
The ADBE stock is also classed as a ‘moderate buy’ according to TipRanks, which based that rating on the views of 29 analysts.
Its consensus Adobe price target was slightly more positive, with an 8.54% predicted upside to $614.33 over the next 12 months, although some analysts believe it could exceed $700.
The following table shows the latest analysts’ Adobe stock predictions.
| Date | Analyst Firm | Action | Rating Change | Price Target | Percentage Change |
| 6/17/2024 | Sanford C. Bernstein | Boost Target | Outperform ? Outperform | $653.00?
$660.00 |
+27.46% |
| 6/14/2024 | JMP Securities | Reiterated Rating | Market Perform | ||
| 6/14/2024 | Piper Sandler | Reiterated Rating | Overweight ? Overweight | $700.00?
$700.00 |
+33.40% |
| 6/14/2024 | BMO Capital Markets | Boost Target | Outperform ? Outperform | $525.00 ? $580.00 | +10.70% |
| 6/14/2024 | Barclays | Boost Target | Overweight ? Overweight | $630.00 ? $650.00 | +23.52% |
| 6/14/2024 | Royal Bank of Canada | Reiterated Rating | Outperform ? Outperform | $600.00 ? $600.00 | +14.02% |
| 6/14/2024 | Wells Fargo & Company | Boost Target | Overweight ? Overweight | $675.00 ? $700.00 | +33.02% |
| 6/14/2024 | Oppenheimer | Reiterated Rating | Outperform ? Outperform | $580.00 ? $580.00 | +10.22% |
| 6/14/2024 | KeyCorp | Boost Target | Underweight ? Underweight | $445.00 ? $450.00 | -1.91% |
Source: MarketBeat
Meanwhile, the algorithmic forecast of WalletInvestor puts the stock at $579.38 in a year’s time and up to $597.97 by July 2029.
Analysts are less reluctant to discuss their Adobe stock forecast 2030 as there are too many variables to consider when looking so far into the future.
Note that analysts’ and algorithm-based projections might prove to be wrong.
The Bottom Line: Should I Invest in Adobe?
As our Adobe stock forecast shows, it’s a very uncertain time for the software giant, with the Federal Trade Commission accusing the company of violating consumer protection law.
However, analysts don’t seem overly concerned about the fall-out and appear more focused on Adobe’s recent results and progress with AI.
Of course, a lot depends on what happens with these legal issues over the coming months and whether it has an adverse impact on the rest of the business.
Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the stock market, the spread of your portfolio, and how comfortable you feel about losing money.
The information in this article does not constitute investment advice and is meant for informational purposes only.
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References
- Adobe – 38 Year Stock Price History | ADBE | MacroTrends (Macrotrends)
- S&P 500 rises 3.5% in June as information technology sector jumps (Spglobal)
- Complaint for Permanent Injunction, Monetary Judgment (Ftc)
- FTC Takes Action Against Adobe and Executives for Hiding Fees, Preventing Consumers from Easily Cancelling Software Subscriptions | Federal Trade Commission (Ftc)
- Adobe – Adobe’s Statement Regarding Federal Trade Commission Complaint
(News.adobe) - Adobe (ADBE) Stock Forecast and Price Target 2024
(Marketbeat) - Adobe (ADBE) Stock Forecast, Price Targets and Analysts Predictions – TipRanks.com (Tipranks)
- Adobe Systems Stock Forecast: up to 579.381 USD! – ADBE Stock Price Prediction, Long-Term & Short-Term Share Revenue Prognosis with Smart Technical Analysis (Walletinvestor)
