Adobe Named Top Pick by BMO Capital Markets

BMO Capital Markets has named Adobe its top pick in a recent note, replacing Palo Alto Networks. Analyst Keith Bachman believes that generative AI will be a significant boost to Adobe’s net new ARR (Annual Recurring Revenue) starting in FY24. Bachman expects Adobe to price its solutions at a modest increase to gain more seat adoption. He also suggests that generative AI can help with the price and mix of Creative Cloud solutions.

Bachman has raised his price target on Adobe shares to $600, implying a more than 13% upside from Monday’s close. The stock has seen a rally of over 57% year-to-date and nearly 22% over the last 12 months. Despite this positive outlook, Adobe’s shares dipped 1.2% during premarket trading on Tuesday.

Overall, Bachman believes that Adobe offers attractive valuation compared to its large-cap GAPR comp group. He anticipates potential acceleration in total revenue growth due to generative AI. More announcements regarding these advancements are expected at the Analyst Day in October.

Source: AsumeTech