Adobe stock loses upside potential

The software company Adobe's rating is decreasing and it is pulling its own stock with it.

The reason for the decline in the company's stock price was the purchase of the Figma software platform.

Wells Fargo analysts expressed general optimism about the compatibility of Adobe and Figma products, but the price that Adobe paid is still a major cautionary note about the deal.

In their view, $20 billion is a price that creates minimal short-term flexibility "and almost zero room for error".

Several other analysts downgraded their bullish ratings to neutral or equivalent after the intention last week. Edward Jones analyst Logan Purk changed his position to Hold from Buy, calling out worries about the deal with Figma.

Purk wrote that the advantages are visible, but the substantial premium paid, shareholder dilution, and longer integration time lines increase performance risk. He also added that the preliminary upside potential is compensated by the potential risks, even in case of a stock rollback.