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Analysts also hiked the price target by $55 to $630 per share.
Adobe shares rose 2% in pre-market Thursday.
BofA’s analysis indicates that the company is positioning itself as a frontrunner in the AI sector.
“Adobe is ahead of the curve, and we believe that AI offerings (such as generative AI-powered content creation tool Firefly) are likely to begin driving meaningful revenue/FCF upside as soon as FY24,” analysts said in an upgrade note.
They see three potential AI monetization opportunities: 1) a paid Firefly subscription, 2) credit packs for Firefly consumption, and 3) custom agreements with global brands to blend data/LLMs with Adobe’s.
“In a conservative base case, we arrive at AI revenue of $300 million in FY24, growing to $960 million by FY26 (which assumes Firefly penetration of 18% to the Creative Cloud/Express installed base). In a blue-sky scenario, we arrive at AI revenue of $1 billion in FY24, growing to $2.9 billion by FY26 (which assumes 33% Firefly penetration to Creative Cloud/Express users).”
While uncertainty remains about Adobe’s proposed acquisition of Figma, analysts believe the company is posed to succeed in collaboration “with or without Figma.”
