Adobe Stock Braces for 10% Swing After Earnings Report - Here’s What to Expect

Adobe Inc. faces a critical earnings report with analysts warning of potential volatility, projecting the stock could move up to 10% in either direction following the announcement. Market sentiment suggests the creative software giant's quarterly results could trigger significant price action as investors assess subscription growth and AI integration metrics against macroeconomic pressures.

Key Takeaways

• Adobe is slated to post its latest earnings after the market closes Thursday, with traders expecting a big swing in the software maker's stock following the event.
• Adobe's stock has tumbled to start the year, amid concerns about competition and disruption from AI.

Adobe is set to report earnings after the market closes Thursday, with traders anticipating a big move from the Photoshop maker's stock following the results.

Based on current options pricing, traders expect Adobe (ADBE) stock could move up to 7% in either direction by the end of the week. A move of that size from Wednesday's close could lift the stock close to $293, recovering some of its recent losses. The low end of that range could drag the stock below $255.

Adobe shares have lost about a fifth of their value since the year began, amid a broader pullback in software stocks on concerns about disruption from AI. Oppenheimer analysts downgraded Adobe's stock in January, saying it exemplifies many of the major challenges facing the application software industry.

Why This Matters to Investors

Adobe and other software stocks have slumped to start this year amid worries about the impact of generative AI. Thursday's report could offer Adobe an opportunity to address investors' concerns.

Jefferies analysts warned ahead of the results that they don't see many catalysts appearing in the near term, and that Adobe could continue to face pressure from growing competition.

Adobe is projected to report adjusted earnings per share of $5.87 on a 10% year-over-year jump in revenue to $6.28 billion for it fiscal first quarter, according to estimates collected by Visible Alpha.

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Wall Street analysts are divided on the stock. Of the 12 analysts with current ratings tracked by Visible Alpha, just five recommend buying the shares, compared to four neutral and three "sell" ratings. Still, their average price target of $368 would suggest nearly 35% upside from Wednesday's close.