Wells Fargo Cuts Adobe to Sell, Citing Mounting Growth Risks

what happened

Adobe shares fell after Wells Fargo issued a double downgrade. Analysts led by Michael Turrin on Monday moved the stock to Underweight, equivalent to Sell, from Overweight and reduced the price target to $225 from $270. Dow Jones Newswires reported that Turrin cited worsening organic growth, execution risks during the management transition and a shift from pricing power toward freemium user acquisition.

Adobe shares dropped 3.2% to $234.61 on Monday. The stock was down 33% this year and was on track for its worst year since 2022, according to Dow Jones Market Data. Turrin described Adobe’s fiscal third-quarter results, released Sept. 10, as “muted” and estimated that net new annual recurring revenue fell more than 40% from a year earlier.

He said the company’s full-year guidance requires net new annual recurring revenue to double quarter over quarter to reach its targets, a result he viewed as unlikely given current operating trends. Turrin also pointed to execution risks during the leadership change. Adobe announced in early September that Anil Chakravarthy will become CEO in December, replacing Shantanu Narayen after 18 years. A freeze on Creative Cloud price increases and a shrinking Adobe Stock business could weigh on annual recurring revenue by nearly $390 million. Barron’s, whose report was carried by Dow Jones Newswires, expects Adobe to take a more conservative approach to its fiscal 2027 outlook.

why it matters

The downgrade highlights pressure on Adobe’s growth model as leadership changes, freemium acquisition and weaker pricing power weigh on recurring-revenue expectations.

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