BMO Capital downgraded Adobe Inc. stock to Market Perform from Outperform on January 9, reducing its price target to $375 from $400. The firm cited limited catalysts and increasing competition as reasons for the move.
"We believe that Adobe's valuation is attractive though faces greater competitive threats in the creative market and thus remains at the bottom of our pecking order in the front office market," said BMO analysts led by Keith Bachman in a Friday investor report.
BMO highlighted competition in the creative market, particularly among small businesses, students, and freelancers. More than 50% of students surveyed in its Creative Cloud survey use rival Canva over Adobe, while an estimated 50% of freelancers use Canva compared to about 10% using Adobe.
"While Adobe’s current valuation is undemanding, we do not envision positive catalysts and think the shares will remain range-bound," the analysts added. "Net, we are downgrading Adobe to Market Perform and lowering our price target to $375."
The report stated no changes to its estimates. In the front office application sector, BMO said it prefers Salesforce and HubSpot over Adobe.