By Angela Palumbo

Adobe stock keeps getting beat up, but a KeyBanc Capital Markets analyst doesn't recommend selling it anymore.

On Friday, Jackson Ader upgraded shares of the creative software company to Sector Weight from Underweight. He didn't give a price target, but called the stock "fairly valued" now.

Midday, the stock was down 0.8 to $386.55. It has dropped 14% this year.

Shares are trading at 18.4 times earnings expected over the next 12 months, which is below the five-year historic average of 31.9 times. That's also lower than the 20.5 times forward earnings multiple of the S&P 500.

"We see little room for downside, revisions to fundamentals through the remainder of the fiscal year, and, given that assumption, it is hard to argue for continued multiple compression relative to peers," Ader wrote in a research note.

Investors are looking for proof that Adobe is monetizing on artificial intelligence. They're worried the company is being left behind in the AI race.

The stock fell 14% alone on March 13 after Adobe reiterated its full-year revenue outlook, with the midpoint of those figures below analyst estimates.

The company is working hard to show shareholders that its AI future is bright. At its investor meeting on Tuesday, for example, the company unveiled a handful of new AI products that spanned out from creative tools such as like the Experience Platform Agent Orchestrator, which enables businesses to build and manage AI agents from Adobe and third parties.

William Blair analyst Jake Roberge is optimistic about Adobe's future, with an Outperform rating.

"We believe that Adobe has built a strong platform for creative, marketing, and document workflows and that the company is well positioned to capitalize on the GenAI opportunity, the increasing need for creative content, and shifting consumer preferences toward digital interactions," he wrote on Thursday.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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March 21, 2025 11:18 ET (15:18 GMT)

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