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Morgan Stanley downgrades Adobe to Underweight and cuts its price target
The firm set a new $240 target, down from $365, citing leadership uncertainty and margin pressure as Adobe leans into a freemium model.
Yahoo Finance reports that a senior Morgan Stanley analyst downgraded Adobe to Underweight, and also reduced the firm’s price target to $240 from $365.
The note pointed to governance uncertainty tied to CEO Shantanu Narayen’s planned departure and CFO Dan Durn’s exit, while warning that Adobe’s freemium go-to-market push aimed at more than 90 million monthly active users could require heavy reinvestment.
Morgan Stanley said converting free users into high-margin paid subscribers carries execution risk, and it expects the leadership and freemium distribution model to weigh on margins in the near term.
The outlet also notes that Morgan Stanley flagged competitive threats from generative AI, arguing that while Creative Cloud integrates AI capabilities, it is becoming harder to translate innovation into durable ARR growth, and the firm expects any meaningful stock re-rating to be delayed into the second half of 2026.