Citi Downgrades Adobe to Sell on Growth Risks Into Fiscal 2027

Citi downgraded Adobe to Sell from Neutral Wednesday, warning of downside risk to consensus growth estimates into fiscal 2027 as strategic changes and AI competition may pressure the software company’s near-term growth.

The bank expects Adobe’s annual recurring revenue (ARR) to grow about 5% year over year through fiscal 2028, 200 to 300 basis points below analyst consensus. Citi also identified macroeconomic uncertainty and competition from software services that integrate artificial intelligence as potential sources of pressure.

Citi analyst Tyler Radke said strategic changes to Adobe’s Creative business could come at the expense of near-term growth. A greater focus on monthly active user growth could also put ARR under pressure, the bank said.

Incoming CEO Anil Chakravarthy is due to take the role in December amid key leadership vacancies. Adobe shares have fallen about 30% year to date.