Adobe Shares Under Pressure Amid Growth Transparency Concerns

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As Adobe prepares to release its quarterly earnings, a cloud of investor skepticism is gathering. The focal point of recent unease stems from an upcoming change in the company's financial reporting methodology, a shift that analysts at Citigroup suggest could signal slowing momentum in its core business.

In a move that has captured market attention, Citigroup revised its price target for Adobe shares downward this week. The financial institution lowered its target to $366 from $400, while maintaining a "Neutral" rating on the stock. This adjustment was prompted not by immediate poor performance, but by Adobe's plan to alter its reporting structure starting in 2026.

The company intends to stop disclosing the separate annual recurring revenue (ARR) growth figure for its "Digital Media" segment. Instead, it will report a single, aggregated metric. Market experts often interpret a reduction in financial transparency as a potential effort to obscure decelerating growth in a key division. Although Citigroup analysts anticipate Adobe will slightly exceed expectations in its upcoming quarterly report, they have also trimmed margin forecasts due to rising investment costs. This combination of increased spending and decreased reporting clarity is weighing on sentiment.

Solid Fundamentals Contrast with Strategic Anxieties

The current investment thesis for Adobe presents a contradiction. On one hand, the software giant's recent operational performance has been robust. For its third quarter, the company posted revenue of $5.99 billion and earnings per share that both surpassed Wall Street's estimates.

On the other hand, the equity has struggled in the market, declining more than 34% since the start of the year and trading well below its pandemic-era highs. This decline persists despite a valuation that appears attractive relative to the sector, with its price-to-earnings ratio sitting notably below the industry average.

Investor hesitation is fueled by two primary concerns. The first is the long-term disruptive threat that generative artificial intelligence poses to the market leadership of Adobe's flagship Creative Cloud suite. The second involves regulatory challenges complicating its growth-by-acquisition strategy. The proposed $1.9 billion takeover of Semrush is currently under legal review, creating uncertainty.

All Eyes on the December 10th Report

The upcoming earnings release on Tuesday, December 10, 2025, is set to be a pivotal moment for Adobe. The market will scrutinize whether the company achieved its projected earnings per share range of $20.80 to $20.85 for the full year. However, management's commentary may carry even greater weight. How executives explain and contextualize the planned change in financial reporting will be critical in addressing investor concerns. Until then, Citigroup's recent target price reduction is likely to limit any significant near-term upside for the stock.