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Adobe Shares Plunge 14% on Weak Revenue Guidance

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Adobe experienced its steepest stock drop in over two years, falling 14% on Thursday following disappointing revenue guidance for the fiscal first quarter of 2024. The software giant forecast sales between $5.63 billion and $5.68 billion, falling short of the $5.73 billion average analyst estimate compiled by LSEG.

The unexpected forecast has rattled investors and analysts alike. TD Cowen downgraded Adobe’s stock from “buy” to “hold,” while Wells Fargo maintained its “buy” rating but acknowledged a “frustrating” outlook for 2024. Adobe’s stock is now down 20% for the year, underperforming the Nasdaq, which has surged 33% in 2024 and recently crossed the 20,000 mark.

Mixed Q4 Performance
Despite the disappointing guidance, Adobe’s fourth-quarter results exceeded expectations:

  • Adjusted earnings per share: $4.81 (vs. $4.66 expected)
  • Revenue: $5.61 billion, an 11% increase year-over-year (vs. $5.54 billion expected)

The company’s growth strategy hinges on monetizing generative artificial intelligence (AI). Adobe has integrated AI tools such as Firefly for image generation into its Creative Cloud and other standalone offerings, which have contributed to its revenue growth thus far.

Analyst Reactions
Deutsche Bank analysts maintained their “buy” rating for Adobe but reduced their target price from $650 to $600, citing cautious optimism. “These results and guidance require a bit of faith in the full year next year,” they said, while also noting that Adobe is among the few application software companies effectively capitalizing on generative AI.

As Adobe seeks to navigate challenges in revenue growth, investors are closely monitoring its ability to sustain momentum in the competitive generative AI space while meeting market expectations.

 

Moderna Stock Plummets 20% After Lowering Guidance on EU Sales and U.S. Vaccine Market Challenges

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Moderna experienced a significant 20% drop in its stock price on Thursday after reporting second-quarter results that, while beating revenue expectations, prompted the company to sharply reduce its full-year sales forecast. The biotech firm now anticipates 2024 product revenue between $3 billion and $3.5 billion, down from its previous estimate of $4 billion.

The revised guidance is attributed to lower-than-expected sales in Europe, heightened competition in the U.S. vaccine market, and potential delays in international revenue. Moderna’s newly approved respiratory syncytial virus (RSV) vaccine, mRESVIA, began shipping in the U.S., but faces stiff competition from existing RSV vaccines by Pfizer and GSK.

Moderna CEO Stephane Bancel highlighted the increased competition for both RSV and Covid vaccines and noted difficulties in securing new contracts with European governments due to tight budgets and existing agreements with Pfizer and BioNTech. The ongoing conflict in Ukraine is also putting strain on government finances.

Despite the current challenges, Bancel expressed optimism for a recovery, projecting sales growth in 2025 and a break-even point by 2026, driven by new product launches.

For the second quarter, Moderna reported:

  • Loss per share: $3.33, better than the expected loss of $3.39
  • Revenue: $241 million, exceeding the $132 million forecast

Revenue from Moderna’s Covid vaccine fell 37% year-over-year, contributing to the company’s net loss of $1.28 billion. However, Moderna achieved a reduction in costs, including a significant drop in sales expenses and a 19% decrease in selling, general, and administrative costs. R&D expenses rose by 6% to $1.2 billion due to increased personnel costs.

Despite these setbacks, Moderna’s stock has risen nearly 20% this year, reflecting confidence in its pipeline and messenger RNA technology. The company is advancing 45 products in development, including a combination vaccine for Covid and flu, and a personalized cancer vaccine with Merck.