Adobe's Price Crumbles on Outlook

"Current valuation levels have proven unsustainable for multiyear periods," Ellis wrote. "We believe it is time to lighten positions." (Smith Barney does not have any investment-banking business with Adobe.)

But not everyone agreed with that assessment. Several analysts maintained favorable ratings on Adobe. Many cited their expectations of continued strength in the company's Acrobat sales, as well as a projected upgrade of the company's Photoshop program later this year.

Baird analyst Steven Ashley reduced his price target from $42 to $40 a share. But he maintained his outperform rating on Adobe's stock.

"While guidance for (the third quarter) was below consensus expectations, the fact remains Adobe has beaten revenues and earnings guidance in each of the past two quarters, and has a history of underpromising and overdelivering," Ashley wrote in a report issued Friday.

"While seasonal softness in (the third quarter) will create a temporary dearth in Adobe's growth, we do not believe this has really altered our investment thesis. We still believe growth should resume in (the fourth quarter), and continue into next year." (Baird does not have investment-banking business with Adobe.)

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