Analysts Forecast 60% Upside for Adobe (ADBE) Despite 43% Decline

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TLDR

  • Adobe (ADBE) shares are hovering close to their 52-week low of approximately $259, marking a 43% decrease from their peak of $453
  • The drop was driven by a broad sell-off in the software sector, worries about AI disruption, and an aggressive growth outlook from Figma
  • Figma surged 14% following a revenue projection of $1.36–$1.37B for 2026, alongside a new AI credit model aimed at Adobe’s customer base
  • Opinions on Wall Street are divided: there are 17 buy ratings compared to 15 holds and 4 sells, with an average price target of $413.60
  • Analysts predict FY2026 EPS of $23.46 (+12.1% YoY) and revenue of $26.04B, yet institutional underweighting is at a four-year high

It has been a difficult year for Adobe (ADBE). The stock is currently trading near $259, close to its 52-week low, after reaching a high of $453 only a few months ago.

ADBE Stock Card

This represents a 43% drop, and the pressure is not originating from a single source.

A widespread sell-off in the software sector during February erased approximately $1 trillion in market value. On February 18, Adobe’s stock declined by 2.5% to 5.4% in a single session, moving alongside peers such as CrowdStrike, Intuit, and Atlassian. The S&P 500 Software and Services sector fell 1.7% that day, with over 90% of its components trading down.

The cause? Fears regarding AI disruption. Investors are doubting whether traditional software companies can maintain their position as competitors built on AI gain strength.

Figma currently stands as the most significant threat to Adobe. On February 19, Figma’s stock rose by about 14% after predicting 2026 revenue between $1.36 billion and $1.37 billion, which beat expectations by almost $80 million. The company also unveiled a new AI credit monetization model scheduled for a March 2026 launch, specifically targeting users of Adobe’s design software.

This is not a remote danger. It is a direct strike.

The forward earnings multiple has contracted by more than 50% over the last year, dropping from roughly 44 times to its current compressed level. The market is revaluing Adobe from a dominant incumbent to a firm battling both sides.

What Analysts Are Saying

Even with the sell-off, the company’s fundamentals have not crumbled. Consensus estimates still forecast FY2026 revenue of $26.04 billion, a 9.5% increase year-over-year. Normalized EPS is projected at $23.46, up 12.1%, with net income margins remaining steady at 36.6%.

These figures do not indicate a failing company. However, the stock is being valued as if it were.

Wall Street maintains a bullish bias, though confidence is waning. As of February 20, the ratings breakdown includes 17 buys and 3 outperforms versus 15 holds and 4 sells. The average price target stands at $413.60, suggesting an upside of almost 60% from current prices.

The range of targets highlights the extent of the divided sentiment—spanning from a bearish scenario of $270 (just above today’s trading price) to a bullish scenario of $605.

On January 5, Jefferies analyst Brent Thill downgraded the stock from Buy to Hold and reduced his price target from $500 to $400. The firm advises that investors remain underweight in software overall, citing slowing growth and noting that more robust AI-related revenue is necessary to alleviate disintermediation worries.

Baird’s Robert Oliver kept his Neutral rating on January 14 but lowered his target from $410 to $350, which still implies approximately 33% upside.

Institutional Activity Is Mixed

Not all investors are heading for the exit. Coatue Management increased its position in Adobe by 43.2% to 874,150 shares as of December 31, 2025.

Conversely, Mubadala Investment Co. reduced its holding by 49% during the same period, bringing it down to just 11,570 shares.

Institutional underweighting in the software sector is now at its most extreme point since 2021.

In the real world, Adobe client Havas is utilizing Adobe tools to slash advertising production costs by up to 50%, a fact the company highlights as proof that its enterprise moat remains secure.

A mid-case valuation model sets a price target of $388.90 for Adobe by November 2030, indicating a total return of 50.4% from current levels.