Citi said Adobe Inc.’s shares are likely to decline as the company shifts its focus toward long-term strategic changes rather than short-term growth. The investment bank downgraded the software stock to sell from neutral and lowered its price target for shares to $207 from $250, indicating roughly 16% downside from Tuesday’s close.
“We downgrade ADBE to a Sell, and we see 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, Radke added. “We expect thoughtful, strategic changes to Adobe’s Creative business, potentially at the expense of near-term growth,” he said. Radke also noted that competition from a range of artificial intelligence-integrated software services could pressure Adobe, and that macroeconomic uncertainties could make its path to share growth more difficult in the near term.
Citi also said an increasing focus on monthly active user growth could put Adobe’s annual recurring revenue, or ARR, under pressure. Radke 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 Wall Street consensus. Of the 39 analysts covering Adobe, 23 have a hold rating, 10 have a buy or strong buy, and six have an underperform rating, according to LSEG data. Shares have fallen about 30% year to date.
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