Adobe Stock Falls. Shares 'Will Remain Range-Bound' As Competition Heats Up, Analyst Says. -- Barrons.com

By Angela Palumbo

Adobe stock was dropping Friday after a BMO Capital Markets analyst downgraded shares, citing competition as an ongoing headwind for the creative software company.

Keith Bachman downgraded shares of Adobe to Market Perform from Outperform and lowered his price target to $375 from $400.

"Creative market competitive dynamics are increasing, particularly in smaller businesses, students, and freelancers," Bachman wrote in a research note on Friday.

Adobe owns software programs such as Photoshop, Illustrator, and Firefly, with customers spanning from large enterprises to individual consumers. However, Adobe is facing competition as it works to maintain current customers and bring on new ones amid the rise of artificial intelligence programs.

Other companies -- such as Canva and Alphabet -- have their own AI programs that compete with Adobe.

"We believe that Adobe's valuation is attractive though faces greater competitive threats in the creative market and thus remains at the bottom of our pecking order in the front office market," Bachman said.

Barron's has reached out to Adobe for comment.

Shares of Adobe were down 2.2% to $331.70 on Friday. The stock has dropped 18% over the past 12 months.

Adobe has been working hard to combat these issues and prove that its own AI tools are spurring growth. When reporting fiscal fourth-quarter financials in December, the company said that total new AI-influenced annual recurring revenue exceeded one-third of its overall business "as we integrate AI deeply into our solutions and continue to launch new AI-first offerings."

Adobe also announced at the time that it has officially launched Photoshop, Express, and Acrobat in ChatGPT, which would be free to ChatGPT users globally.

Still, Bachman has concerns.

"While Adobe's current valuation is undemanding, we do not envision positive catalysts and think the shares will remain range-bound," he said.

Adobe trades at 14 times earnings expected over the next 12 months, which is well below its 5-year average of 28.1 times.

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 09, 2026 12:24 ET (17:24 GMT)

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