This Adobe analyst is going against the grain by telling investors to buy the stock

By Hannah Pedone

Adobe's stock is rallying after a contrarian upgrade at HSBC

Shares of Adobe were up on Thursday after HSBC analyst Stephen Bersey upgraded shares of Adobe to buy from hold.

Design software has been an easy target for those bearish on software in the artificial-intelligence era, and Adobe has struggled to break free of that narrative, even after recent earnings beats.

Now HSBC analyst Stephen Bersey is questioning why the stock has been suffering so much given that company has not seen any "material impact from AI-powered competitors." Adobe shares (ADBE) have lost 34% so far this year.

Bersey upgraded shares of Adobe to buy from hold on Thursday and raised his price target to $308 from $282, saying that Adobe's platform is "sticky" due to user familiarity with its workflow. He believes the market is overestimating the adverse impact of AI-based design rivals and notes user interest in Adobe's own AI features.

Adobe's stock gained 4% on Thursday.

His view aligns with trends shown in Adobe's earnings report released last month. The company raised its revenue guidance for fiscal year 2026 to a range of $26.5 billion to $26.6 billion from its previous outlook of $25.9 billion to $26.1 billion. Adobe also posted earnings and revenue beats for the fiscal second quarter.

Just over a fifth of analysts tracked by FactSet hold a buy rating on the stock, with the majority of analysts rating Adobe at the equivalent of hold, according to Dow Jones Market Data.

Analysts have selectively been warming to beaten-down software stocks in recent days. On Wednesday, Guggenheim analyst John DiFucci upgraded shares of two of the year's biggest software losers - ServiceNow (NOW) and Salesforce (CRM) - to buy from neutral, saying that the "Armageddon scenario" currently priced in for Salesforce is "misaligned with reality." And D.A. Davidson's Gil Luria just turned bullish on shares of Palantir Technologies (PLTR).

Software companies in general need to convince investors of their AI resilience, but Adobe is in the unique spot of having to do that during a period of C-suite turmoil. In March, Adobe CEO Shantanu Narayen announced plans to step down once a successor is named, after holding the post for 18 years. And last month, Adobe's Chief Financial Officer Dan Durn departed the company for chip giant Marvell (MRVL) - perhaps giving investors further reason to rotate out of software and into chips.

See also: Palantir's stock bounces back as analyst cheers company's unique AI advantage

-Hannah Pedone

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

(END) Dow Jones Newswires

07-02-26 1702ET