Undergoing Multiple Transitions at Once Creates Heightened Execution Risk; Downgrade to Underweight

研报英文原文证据摘录

Undergoing Multiple Transitions at Once Creates Heightened Execution Risk; Downgrade to Underweight

IdeaMand pricing benefit traversing the portfolio left investors questioning the path to

reacceleration. Since then, three incremental transitions have become more

apparent to us (and the market broadly) that further complicate that path – a

more explicit freemium route-to-market pivot, a simultaneous CEO/CFO

leadership transition, and an operating model shift from margin harvesting

toward AI reinvestment. While each transition may be manageable in isolation,

their convergence raises the bar for execution at a time when other areas of

Software offer cleaner evidence of growth durability, operating leverage, and / or

near-term AI monetization. In addition, in our assessment of our broader coverage

'Moat and Journey' scores as it relates to AI readiness, Adobe screens relatively

weaker across SaaS (described in detail below). Net, while we acknowledge that

shares trading at ~12x CY27 GAAP P/E price in much of this disruption risk,

Adobe’s simultaneous transitions reduce visibility – and therefore our conviction

– in the timing and magnitude of a potential turnaround. We expect this

uncertainty and execution risk to remain an overhang on investor willingness to

engage with shares, keeping the multiple depressed and range-bound, supporting

our relative UW view ( Exhibit 1 ).

Exhibit 1: ADBE Shares Trade at the Low End of the Mature at Scale Software

Peer Group

Mature at-Scale Group GAAP P/E vs. Rev Growth

45%

Dot-Com Era Trough:

Emergence of SaaS 28x GAAP PE

Trough: 14x GAAP PE

40%

ORCL

35%

30%

(CY26-CY27) 25%

20% MSFT Growth

15%

Revenue INTU SAPG

10% ADBE CRM WDAY

5%

0%

0x 10x 20x 30x 40x 50x 60x

GAAP PE (CY26)

Source: Company Data, Morgan Stanley Research