UPDATE: Goldman Sachs Raises Adobe (ADBE) PT to $765, Would Buy Weakness

(Updated - September 22, 2021 7:12 AM EDT)

Goldman Sachs analyst Kash Rangan raised the price target on Adobe (NASDAQ: ADBE) to $765.00 (from $735.00) after shares traded off 4% net new Digital Media ARR upside missed heightened expectations. The beat was 3% vs guidance which is much less than the 15% beat in 2Q21 and the 35% beat in 3Q20.

The analyst remains bullish, however and reiterated a Buy rating, stating "the smaller magnitude of the beat was largely driven by early summer seasonality amid vaccine effectiveness, and in our view, does not diminish the prospects for upside in 4Q, given: 1) guidance calls for the largest increase to DM net new ARR, 2) solid beats in revs and EPS, 3) accelerating Document Cloud and Digital Experience revenue growth, 4) SMB and enterprise momentum remains strong across Creative Cloud, Document Cloud, and Digital Experience, 5) retention rates continue to improve sequentially in 3Q vs 2Q vs 1Q, and 6) as we noted previously, Document Cloud is a very large opportunity and is increasing its mix of net new ARR. We believe that Adobe is on track to grow revs 2x and even 3x from current levels over the next few years, entering the top ranks of software companies to reach $40bn+ of revenues. The unprecedented pace of digital transformation underpinning the Digital Experience business, the durable shift from paper to digital document management, and Creative Cloud TAM expansion amid the surge in video and content creation, give us incremental confidence in this potential."

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