Adobe shares plunge 10% after Russia's invasion of Ukraine leads to reduced sales forecast

Key Points
  • Adobe reduced its fiscal year forecast late Tuesday, citing the impact of halting sales in Russia and Belarus.
  • Analysts lowered their target price estimates for the fiscal year to reflect the company's updated numbers.
  • Adobe shares are about 39% off their all-time high from November.

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Adobe shares fell about 10% Wednesday after the software company lowered estimates for the fiscal year to account for the impact of halting sales in Russia.

Adobe said on March 4, the first day of the quarter, that it was stopping new sales in Russia and Belarus after Russia's invasion of Ukraine. In its fiscal first-quarter earnings report after the close of trading on Tuesday, Adobe said it was reducing its forecast for annual recurring revenue by $75 million for fiscal 2022 because of the pullback in the region.

While Adobe will continue to sell products in Ukraine, it reduced its expected Digital Media ARR there by an additional $12 million, resulting in a total cut of $87 million. The company is forecasting revenue of $4.34 billion for the fiscal year.

Analysts from firms including Deutsche Bank and Piper Sandler lowered their price targets on the stock in response to Adobe's updated numbers. Deutsche analysts adjusted their price target to $575 from $660, and Piper Sandler to $545 from $600.

This is the second time in the past three months that Adobe has suffered a double-digit drop. In December, the shares plunged after the company provided a first-quarter forecast that trailed estimates. The stock has dropped about 39% from its all-time high in November to $420.31 as of mid-day on Wednesday.

Despite its forecast, Adobe reported better-than-expected quarterly revenue for the quarter.