04:23 PM EDT, 03/13/2025 (MT Newswires) -- Adobe's (ADBE) fiscal first-quarter performance was likely overshadowed by changes to digital media disclosures that left investors craving for visibility into key metrics, Morgan Stanley said in a note emailed Thursday.

Shares of Adobe closed 14% lower on Thursday despite the software company late Wednesday reporting record revenue that topped expectations and a bigger-than-projected increase in earnings per share.

Investor sentiment likely soured due amid Adobe's changes to its digital media disclosures, according to Morgan Stanley. Its use of rounded numbers "creates a wider potential dispersion for net new (annualized recurring revenue) contribution," the brokerage wrote in a note.

The dampened disclosures leave investors "feeling transparency on the business took one step forward, but two steps back," Morgan Stanley said.

Morgan Stanley reduced its price target on the stock to $600 from $660, while maintaining an overweight rating.

The company's new financial segmentation by customer group better aligns with demand pools, but the removal of creative and document cloud ARR was surprising, the brokerage wrote. "Further, the lack of historicals on the customer group segmentation limits the ability to confidently model the metric going forward."

The first quarter's digital media net new ARR of $414 million beat consensus estimates by 6%, but was down both sequentially and year-over-year, the research report showed.

"The risk-reward remains attractive when coupled with increasing optimism on (generative artificial intelligence) monetization ramping up in 2025," the brokerage said.

Price: 375.48, Change: -63.12, Percent Change: -14.39