Adobe could be another generative AI winner, according to BMO Capital Markets. Analyst Keith Bachman named Adobe its top pick in a Tuesday note, replacing Palo Alto Networks . BMO has an outperform rating on shares. “For ADBE, we believe that generative AI can be a meaningful tailwind to net new ARR, starting mostly in FY24. We believe that ADBE will price solutions at a modest increase (low-double-digits) in order to gain more seat adoption, though we expect more formal announcements closer to the Analyst Day in October,” said Bachman. Generative AI can also help with the price and mix of Creative Cloud solutions, according to the analyst. Bachman raised his price target on shares to $600 from $575, implying more than 13% upside from Monday’s close. The stock has rallied more than 57% year to date and nearly 22% over the last 12 months. “From a valuation perspective, we think ADBE is reasonably if not attractively valued, especially compared to our large-cap GAPR comp group (on both a reported and GAAP basis), and given that we think Creative Cloud and thus total revenue growth have potential to accelerate due to gen AI,” Bachman added. Shares ticked down 1.2% Tuesday during premarket trading, however. ADBE YTD mountain ADBE in 2023 —CNBC’s Michael Bloom contributed to this report.
