Barclays cuts PT on Adobe (ADBE.O) to $250 from $275

Barclays has lowered its price target for Adobe (NASDAQ:ADBE) to $250 from $275, reflecting concerns over near-term revenue growth and the company’s leadership transition. The firm also downgraded the stock to Equalweight. Adobe’s stock currently trades at $269.78, having declined 28.6% over the past year.

The downgrade follows Adobe’s first-quarter net new annual recurring revenue (ARR) of $400 million, which fell short of Barclays’ $460 million estimate. A significant portion of the shortfall was attributed to a $70 million decline in Adobe Stock sales, as customers increasingly use generative AI tools like Adobe Firefly to create images from text prompts. This shift has led to a move from high average revenue per user (ARPU) subscriptions to lower-ARPU generative credit packs.

Barclays also cited uncertainty surrounding the leadership transition, as longtime CEO Shantanu Narayen steps down from the role, though he will remain as board chair. The firm noted that it may take time for a new CEO to implement meaningful changes, particularly given Adobe’s large $25 billion-plus annual recurring revenue base.

Despite these challenges, Adobe maintained its fiscal 2026 guidance and reported Q1 2026 earnings that exceeded analyst expectations, with non-GAAP EPS of $6.06 and revenue of $6.40 billion. The firm highlighted potential for growth in the second half of the year from enterprise demand, freemium monetization, and increased generative credit usage.