San Jose, California-based Adobe Inc. (ADBE) is a diversified software company operating through Digital Media, Digital Experience, and Publishing and Advertising segments. With a market cap of $144.7 billion, Adobe operates as one of the largest software companies in the world.

The software giant has significantly underperformed the broader market over the past year. Adobe’s stock has plummeted 37.8% over the past 52 weeks and approximately 25% on a YTD basis, compared to the S&P 500 Index’s ($SPX) 19.3% gains over the past year and 8.4% returns in 2025.

Narrowing the focus, Adobe has also lagged behind the industry-focused iShares Expanded Tech-Software Sector ETF’s (IGV) 31.4% surge over the past year and 8.2% uptick in 2025.

Adobe’s stock prices dropped 5.3% in the trading session after the release of its mixed Q2 results on Jun. 12. Driven by solid ARR and momentum, the company’s overall topline for the quarter grew 10.6% year-over-year to $5.9 billion, setting a record for Q2 and surpassing Street projections. Meanwhile, its non-GAAP net income increased 7.3% year-over-year to $2.2 billion, and benefiting from share repurchases, its non-GAAP EPS surged by 12.9% to $5.06, beating the consensus estimates.

Despite these impressive figures, investors have been concerned about Adobe’s future growth potential as its remaining performance obligation (RPO), a key indicator of its growth, has remained under pressure. In Q1, its RPO came in at $19.7 billion, which fell short of expectations. Further, its RPO remained steady at $19.7 billion at the end of Q2, making investors jittery. Moreover, investors have also been concerned about the intense competition that Adobe’s products are facing from Gen AI tools.

For the full fiscal 2025, ending in November, analysts expect Adobe to report a non-GAAP EPS of $16.92, up 13.6% year-over-year. The company has a solid earnings surprise history. It has surpassed the Street’s bottom-line estimates in each of the past four quarters.

Among the 34 analysts covering the ADBE stock, the consensus rating is a “Moderate Buy.” That’s based on 23 “Strong Buy,” two “Moderate Buy,” eight “Hold,” and one “Strong Sell” rating.

This configuration is slightly more optimistic than three months ago, when the stock had 21 “Strong Buy” recommendations.

On Jul. 2, Redburn Atlantic analyst Omar Sheikh downgraded ADBE to “Sell” and lowered the price target from $420 to $280.

As of writing, ADBE’s mean price target of $493.57 represents a 47.9% premium to current price levels, while its street-high target of $605 suggests a staggering 81.3% upside potential.