Adobe's (ADBE) fiscal Q3 results strengthened the view that its software business is showing resilience in the era of AI, but there was not enough upside to drive a further re-rating of the stock, UBS Securities said.
The investment firm said in a note Thursday that the results reinforce the view that the SaaS/apps layer is showing resiliency amid the AI technology shift.
The company maintained its fiscal 2027 annual recurring revenue outlook of 10%, suggesting that AI has not materially disrupted its business, in line with most of its application software peers. EPS also remained strong, with Q4 guidance modestly above UBS' estimate.
However, Creative revenue growth appeared weak, with minimal or no sequential growth, suggesting the benefit from price increases could be declining. Pricing changes and increased AI usage could also be impacting margins, according to the research note.
UBS maintained its neutral rating on the stock and raised its price target to $255 from $225, citing the re-rating of its peer group.
Shares of Adobe were up 2.2% in Friday trading.
Price: $254.44, Change: $+5.60, Percent Change: +2.25%