Adobe Stock (ADBE) Is Downgraded as Rival Figma Announces IPO

Business Insider

20 hours ago

Creative software firm Adobe (ADBE) has seen its stock downgraded on the same day that rival company Figma announced plans to hold an initial public offering (IPO) on the New York Stock Exchange (NYSE).
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The company behind products such as Photoshop and Illustrator has had the rating on its stock lowered to a Hold-equivalent neutral by Rothschild & Co. Redburn. The firm also lowered the target price on the shares to $280 from $420, citing continued erosion from generative artificial intelligence (AI) tools and a loss of advantage in the content creation software space.
ADBE stock is down 5% in afternoon trading on July 2. News of the analyst downgrade comes on the same day that Figma, last valued at $12.50 billion, announced plans to hold an IPO and trade under the ticker symbol 'FIG' on the New York big board. A date for the IPO has not yet been set, but the share offering is expected to be highly anticipated given Figma's growth rate and valuation.
Ongoing Struggles
Adobe has struggled to shake perceptions that its creative software products will be disrupted by AI. So far this year, ADBE stock is down 16%, pushing its 12-month loss to 31%. At the same time, Figma is also seen as a serious threat to Adobe's business moving forward.
Adobe tried to acquire Figma for $20 billion. But the deal was canceled in late 2023 due to regulatory concerns in the United Kingdom (U.K.). The canceled acquisition led Adobe to pay Figma a $1 billion termination fee. Now, with Figma holding one of the hottest IPOs of the year, analysts are again reevaluating ADBE stock.
Is ADBE Stock a Buy?
Adobe's stock has a consensus Moderate Buy rating among 27 Wall Street analysts. That rating is based on 20 Buy and seven Hold ratings issued in the last three months. The average ADBE price target of $503.83 implies 34.71% upside from current levels.