By Senad Karaahmetovic
Shares of Adobe (NASDAQ:) are down about 1% today after two more analysts cut the rating on the tech stock following the $20 billion Figma deal.
A Wells Fargo analyst said Adobe “shocked the world” by announcing the $20 billion Figma deal. The analyst downgraded to Equal Weight from Overweight.
“While the product/strategic fit is clearly aligned, it’s the price tag that is likely to lend credence to the bear case, at least for now…We expect investor questions around slowing growth/increasing competition on the digital media side of the business to only intensify, esp. given 3Q results/4Q guidance suggest price increases aren’t providing as much of an offset as anticipated,” the analyst wrote in a research note.
He expects the overhang on ADBE stock to stay until the transaction is completed and sees shares trading range bound. His new price target on Adobe stock is $310.
Similarly, Edward Jones downgraded Adobe to Hold from Buy on the same basis.
“Despite our favorable view of the business, we have concerns around the $20 billion purchase of Figma. We can see the merits, but the significant premium paid, shareholder dilution, and longer integration timeline increase the execution risk. Even with a pullback in shares, we think the potential upside is offset by the potential risks,” an analyst said in a note.