Wells Fargo Cuts Adobe To Underweight, Price Target Falls To $225

The bank lowered its target by $45 from $270, with analyst Michael Turrin pointing to AI budget pressure and a shaky path to 2027 growth.

Wells Fargo downgraded Adobe to underweight on Monday and cut its price target to $225 from $270. Reports differ on where the rating stood before the move, with some describing it as overweight and others as equal weight, though they agree on the size of the target cut.

Analyst Michael Turrin said an AI budget-share survey shows Adobe losing ground, and pointed to cracks in third-quarter results, a steep fourth-quarter ramp needed in annual recurring revenue, risk to fiscal 2027 guidance during a CEO and CFO transition, and tougher competition in creative software, according to Investing.com and Benzinga. Wells Fargo now models negative growth in new annual recurring revenue for fiscal 2027 and total annual recurring revenue growth of about 7%, below a consensus of more than 8%, Investing.com reported. Invezz reported that Adobe's organic net new annual recurring revenue fell more than 40% in the third quarter, leaving fourth-quarter net new ARR needing to nearly double to hit full-year targets.

Adobe shares traded between about $233.50 and $242.27 on Monday, above the new $225 target, and are down roughly 31% for the year, according to 24/7 Wall St. and Investing.com. TradingPedia reported that Adobe's results and softer fourth-quarter guidance, along with uncertainty tied to a CEO transition planned for December 1, had already weighed on the stock before this downgrade.

The move targets Adobe specifically, apart from the broader call Wells Fargo made on tech valuations in mid-September, when it argued that sector multiples no longer justified overweight positioning. A $45 cut to the price target alongside the rating change points to a sharper reassessment of Adobe's growth trajectory rather than a read-through from that sector view, and it comes without any Adobe-specific news to explain why now.