Key Takeaways
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Adobe stock is down 29% in 2026, and on Nov. 4 Citi cut it to Sell with a $207 target, expecting a weaker fiscal 2027 outlook.
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The business is still growing: third-quarter revenue rose 13%, and analysts expect normalized EPS to climb from $20.94 in fiscal 2025 to $31.20 in fiscal 2028.
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The stock trades far below its five-year average forward P/E, and Adobe's free cash flow lets it buy back a meaningful slice of its shares each year.
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At this price, a lot of bad news is already priced in, which makes Adobe a stock to buy more of ahead of its expected Dec. 9 report.
Adobe ( ADBE:NASDAQ )is down 29% in 2026, and Wall Street keeps piling on. On Nov. 4, Citi cut the stock to Sell and lowered its price target to $207 from $250.
Citi is the latest in a string of downgrades this fall. Goldman Sachs repeated its Sell with a $200 target on Oct. 2, Wells Fargo cut Adobe two notches to Underweight with a $225 target on Oct. 12, and HSBC moved to Hold at $267 a day later.
But the selling looks overdone.
TIKR tracks 39 analysts on Adobe. How many say "Buy"?
See the full breakdown of Buy, Hold, and Sell ratings on Adobe, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Adobe's Analyst Ratings
Citi is bracing for a weaker 2027
Citi analyst Tyler Radke expects Adobe to give a weaker fiscal 2027 forecast when it reports fourth-quarter results. He cut his net new annual recurring revenue estimates to $1.5 billion for fiscal 2027, down $470 million, and to $1.45 billion for fiscal 2028, down $500 million.
Some of the worry is about who will give that forecast. Shantanu Narayen hands the CEO job to Anil Chakravarthy on Dec. 1 and becomes executive chair. David Wadhwani, who ran Adobe's creativity and productivity business, is leaving, and Steve Day is serving as interim CFO.
The bigger worry is AI, and whether new tools will undercut what Adobe can charge for its software. On the Nov. 2 episode of The Prof G Pod , Scott Galloway asked whether AI is killing software, and said that so far the market has decided "the rumors of SaaS's death have been greatly exaggerated."
Adobe shareholders might disagree. But Galloway also pointed out that Adobe was one of 32 software partners when OpenAI launched its new marketplace. That's not how you treat a company you're about to replace.
So far, the business is fine
In its fiscal third quarter, which ended Aug. 28, Adobe's revenue grew 13% to a record $6.76 billion, and its total annualized recurring revenue rose 11.2% to $27.50 billion. Non-GAAP EPS climbed 15% to $6.13, and management raised its full-year non-GAAP EPS target to $24.45-$24.50.
Heading into Citi's call, analysts expected normalized EPS to keep rising through fiscal 2028:
That's growth of about 14% a year from fiscal 2025 to fiscal 2028. If Citi is right about the outlook, the $27.43 consensus for fiscal 2027 will likely come down some. But it would take a deep cut to make this stock look expensive.
At 9x earnings, a lot of bad news is priced in
Adobe trades at 9.4x forward earnings, well under half its five-year average of 23x:
(It was as high as 51x in late 2021.)
Adobe's free cash flow has grown nearly fivefold since fiscal 2016, to $9.85 billion in fiscal 2025:
Against a $96.7 billion market cap, that's a free cash flow yield of about 10%.
That matters because Adobe returns its cash through buybacks, and at this price each dollar buys back more of the company. It repurchased about 9.5 million shares in the third quarter alone, and its shares outstanding fell from 413 million to 391 million over the first nine months of fiscal 2026. That figure already counts the new stock it pays to employees.
If Adobe shrinks its share count by even 5% a year, that alone covers a bit under half of the 12% EPS growth analysts expect for fiscal 2027. It also has $24.55 billion left on its buyback authorization.
Time to buy more
The risk is real. If AI tools squeeze Adobe's pricing, today's estimates are too high, and a new management team could reset expectations lower.
But at 9.4x forward earnings, Adobe's growth would have to nearly stall for this price to look expensive, and it can keep buying back a big slice of itself while investors wait. That makes Adobe a stock to buy more of, not sell.
Of course, the real test comes with Adobe's fourth-quarter report, expected after the close on Dec. 9, which will likely include its first fiscal 2027 targets under Chakravarthy. If those come in well short of what analysts now expect, the bears will have a point.
So what is Adobe stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what Adobe could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use.
