03:25 PM EST, 12/12/2024 (MT Newswires) -- Adobe's (ADBE) ability to monetize its artificial intelligence products in the near term is seen mitigated by growing competition and price pressures, UBS Securities said in a note e-mailed Thursday.

Late Wednesday, the software maker logged fiscal fourth-quarter results that topped market expectations, though its 2025 outlook fell short. The company expects full-year digital media ending annualized recurring revenue to increase 11% on an annual basis.

The ARR outlook doesn't show any "clear" AI upside, UBS analysts Karl Keirstead and Seth Gilbert said in a note to clients. The company is trying to monetize AI in fiscal 2025 through new specific AI tiers instead of broad price hikes, as expected by its investors, the analysts added.

Adobe shares were down nearly 14% in Thursday late-afternoon trade.

The company is investing "aggressively" in AI products, Chief Financial Officer Dan Durn said on an earnings conference call late Wednesday, according to a FactSet transcript. "New AI releases including Express, Acrobat AI Assistant, Firefly Services, DX premium tiers and GenStudio for Performance Marketing have expanded the portfolio of products, driving proliferation and meaningful GenAI monetization," Durn said.

Adobe plans to soon roll out a new higher-priced Firefly offering that includes its video models as "a comprehensive AI solution" for creative professionals, potentially allowing the company to monetize new users, David Wadhwani, president of the digital media business, told analysts.

"Adobe's been pushing an AI narrative for (two) years now and we still see no evidence of monetization," Keirstead and Gilbert said. "Adobe's still messaging that it is reluctant to take AI pricing at the lower end, and will instead focus on usage/adoption."

UBS cut its price target on the Adobe stock to $525 from $550 while maintaining its neutral rating.

"Bottom line, the stock is quickly reflecting a view that Adobe is facing competition and price pressure that is mitigating its ability to monetize its AI products near term," the analysts wrote.

Price: 473.70, Change: -76.23, Percent Change: -13.86