JPMorgan initiates Dianthus stock at Overweight, $135 target

JPMorgan has reduced its price target on Adobe Inc. (NASDAQ:ADBE) stock to $315, down from $340, while keeping an Overweight rating. The company's fiscal third quarter 2026 results exceeded expectations, with total revenue growing 13% year-over-year to $6.76 billion, surpassing the previous estimate by $60 million. Adobe also raised its full-year targets post results.

However, the stock has fallen 29% year-to-date, reducing its market capitalization to $98.9 billion. Despite the beat, Adobe's stock performance has been lackluster. InvestingPro analysis suggests the stock is potentially undervalued, featuring on their list of undervalued stocks. The company has emphasized user acquisition, with Creative freemium monthly active users reaching over 100 million, a 70% increase year-over-year.

AI-first annual recurring revenue has surged to over $650 million, a 150% increase year-over-year. Total monthly active users across all businesses surpassed 1 billion, a more than 20% year-over-year increase. Total annual recurring revenue hit $27.50 billion, up 11.2% year-over-year. Despite growth in net new annual recurring revenue, remaining performance obligations growth indicated potential monetization challenges.

The company's fiscal fourth quarter revenue guide was slightly below market expectations, with a softer outlook for Business Professionals & Consumers. Adobe's 2026 annual recurring revenue growth is projected at around 10.2%. Recent news includes Adobe's fiscal third-quarter results exceeding Wall Street expectations, with non-GAAP earnings of $6.13 per share on $6.76 billion in revenue, a 13% increase from the previous year.

Total annual recurring revenue reached $27.5 billion, driven by $400 million in net new annual recurring revenue despite a 38% year-over-year decline due to an increased freemium model. Morgan Stanley has maintained an Underweight rating on Adobe with a price target of $240.00, citing limited evidence of inflection. Analysts and investors are closely watching Adobe's cautious near-term outlook, focusing on freemium growth and AI product development.