11:08 AM EDT, 06/13/2025 (MT Newswires) -- Adobe (ADBE) will likely need more time to reap the benefits of its strategy aimed at driving demand amid rising competition concerns in generative artificial intelligence, RBC Capital Markets said in a Friday client note.

The software maker posted late Thursday fiscal second-quarter results that beat market expectations, driven by double-digit revenue gains in digital media and experience, prompting the company to raise its full-year outlook.

The results showed Adobe is executing on its strategic roadmap, but the "quantification" of these initiatives remains a challenge "partially due to the early innings of the opportunity," according to RBC analysts led by Matthew Swanson. Adobe shares were down nearly 6% intraday Friday.

"While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these initiatives and quiet concerns of competition around GenAI," Swanson wrote.

Adobe now expects fiscal 2025 adjusted EPS of $20.50 to $20.70, compared with $20.20 to $20.50 previously expected. Revenue is seen at $23.50 billion to $23.60 billion, up from the prior outlook of $23.30 billion to $23.55 billion. Analysts are modeling for $20.57 in full-year non-GAAP EPS and $23.56 billion in sales.

The outlook was raised despite a dynamic macro and competitive environment and increased "scrutiny" in the enterprise, RBC said. The brokerage continues to view generative AI as a near- and long-term benefit for Adobe's creative and experience businesses, and expects it to be a catalyst for the company's revenue in the ongoing year.

RBC maintained its outperform rating on Adobe shares and price target of $480.

"We feel the company is well-positioned for the increased complexity of content supply chain management and the growing need for automation to unlock the value of generative content," Swanson said.

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