Adobe ‘s shares are likely to slide as the company starts prioritizing long-term strategic changes to its business over short-term growth, according to Citi. The investment bank downgraded the software stock to sell from neutral. It also lowered its price target on shares to $207 from $250, suggesting roughly 16% downside from Tuesday’s close. “We downgrade ADBE to a Sell, seeing downside risk to consensus growth estimates into [fiscal year 2027],” analyst Tyler Radke said Wednesday. Incoming CEO Anil Chakravarthy will take the position in December amid key leadership vacancies, he added. “We expect thoughtful, strategic changes to Adobe’s Creative business, potentially at the expense of near-term growth.” The analyst added that rising competition from a variety of artificial intelligence integrated software services could also put pressure on Adobe. In addition, the firm faces macroeconomic uncertainties that could make its path to share growth more difficult in the near term, he noted. An increasing focus on monthly active user growth could also put Adobe’s annual recurring revenue, or ARR, under pressure, Citi said. The analyst said he expects Adobe’s ARR to grow at roughly 5% year over year through fiscal 2028, which is between 200 and 300 basis points below analysts’ consensus estimate. The bank’s call goes against consensus on Wall Street. Of the 39 analysts covering Adobe, 23 have a hold on the stock, while 10 have a buy or strong buy and six have an underperform rating on it, LSEG data shows. Shares have fallen about 30% year to date.
