Shares of Adobe Inc (NASDAQ:ADBE) fell slightly in early trading on Wednesday, after having jumped on the company’s fiscal second-quarter results.
The company is well positioned to capture price/mix and new users through generative artificial intelligence (AI), according to BMO Capital Markets.
The Adobe Analyst: Keith Bachman upgraded the rating for Adobe from Market Perform to Outperform, while raising the price target from $500 to $570.
The Adobe Thesis: Although still in the early stages, the availability of beta Firefly has generated interest “from millions of users,” including a meaningful share of non-Creative Cloud users, Bachman said in the upgrade note.
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“More specifically, we think that Adobe can use generative AI to potentially increase prices of existing solutions and/or offer new SKUs, and that users would be willing to spend more for these solutions with generative AI,” the analyst wrote.
“Additionally, we think that generative AI can help with retention in enterprise, which would be positive for mix, by making the solutions higher value,” he added.
ADBE Price Action: Shares of Adobe declined by 1.83% to $476.95 at the time of publishing Wednesday.
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