Last Update 08 Dec 25

SEMR: Adobe Cash Deal Will Likely Cap Near-Term Upside At Current Levels

Analysts have modestly lifted their price target on Semrush Holdings to approximately $12.00 per share, reflecting the Adobe takeout valuation while acknowledging limited upside potential under the current acquisition terms.

Analyst Commentary

Analyst reactions to the Adobe agreement center on the balance between a guaranteed cash outcome and the foregone upside from Semrush's standalone growth story.

Bullish Takeaways

Bullish analysts see the $12 per share offer as effectively setting a ceiling for near term trading, anchoring valuation close to the takeout price and reducing downside volatility.
The assumption that the sale process was competitive supports the view that the transaction reflects a market tested valuation, limiting the probability that Semrush was materially mispriced before the deal.
Some note that, while viewed as unlikely, the possibility of an over the top competing offer introduces a modest upside option value for shareholders at current levels.
The cash nature of the deal reduces execution risk compared with Semrush remaining independent, where achieving prior growth targets and margin expansion would have been required to justify higher valuations.

Bearish Takeaways

Bearish analysts argue that the $12 valuation is relatively low versus Semrush's long term growth potential, implying that shareholders may be exiting before the company fully monetizes its product and user base.
Recent price target reductions toward the high single digit range underscore skepticism about Semrush's ability to deliver upside as a standalone company, reinforcing why the board may have accepted a modest premium.
The shift from Buy or Overweight style recommendations to more neutral stances signals that most of the near term upside is now capped by the deal, with limited catalysts for multiple expansion.
There is concern that, absent a credible competing bid, investors have little leverage to demand a higher price, leaving them dependent on regulatory and closing execution for any remaining return.

What's in the News

Adobe is close to acquiring Semrush in a roughly $1.9 billion all cash deal at $12 per share, a sharp premium to the pre deal trading price of $6.76. (Wall Street Journal)
Adobe has formally agreed to acquire Semrush for $2 billion in cash at $12 per share, with the deal unanimously approved by both boards and contingent on shareholder and regulatory approval, including antitrust review. (Company announcement)
The merger agreement includes a $63 million termination fee payable by Semrush if the transaction does not close under certain conditions, reinforcing the board's commitment to the Adobe transaction. (Company announcement)
Semrush issued fourth quarter 2025 revenue guidance of $117.5 million to $119.5 million and full year 2025 guidance of $443.5 million to $445.5 million, implying mid to high teens year over year growth despite the pending acquisition. (Company guidance)

Valuation Changes

Fair Value: Unchanged at $12.00 per share, mirroring the Adobe offer price and indicating no adjustment to the base case takeout valuation.
Discount Rate: Risen slightly from approximately 8.42 percent to 8.48 percent. This reflects a modest increase in perceived risk or required return.
Revenue Growth: Essentially unchanged at about 14.46 percent. This indicates no material revision to top line growth expectations.
Net Profit Margin: Stable at roughly 9.88 percent, with only an immaterial downward adjustment to long term profitability assumptions.
Future P/E: Edged up slightly from about 37.34x to 37.40x, implying a marginally higher valuation multiple applied to projected earnings.

Strong focus on AI-powered enterprise solutions and product expansion positions the company for long-term growth and improved margins.
Low enterprise penetration and shifting away from low-value segments create significant opportunity for sustained revenue and customer retention gains.
A shift to enterprise clients, evolving search trends, and rising competition threaten Semrush's revenue growth, margins, and resilience amid exposure to currency risks and market commoditization.

Catalysts

About Semrush Holdings

Develops an online visibility management software-as-a-service platform in the United States, the United Kingdom, and internationally.What are the underlying business or industry changes driving this perspective?

The accelerating adoption of AI-powered search and Large Language Model (LLM) interfaces is creating a new layer of complexity for digital marketing and online visibility, driving increased demand for advanced analytics and optimization tools like Semrush's AI products-positioning the company to capture higher-value enterprise clients and supporting long-term revenue growth.
The substantial growth in enterprise accounts (average ARR per enterprise customer up 15% YoY, number of $50K+ customers up 83% YoY) and low current penetration of Semrush's enterprise offerings (fewer than 5% of 9,000 enterprise accounts on enterprise SEO solution) highlight a significant untapped market, serving as a catalyst for sustained top-line expansion.
Ongoing cross-selling and expansion of Semrush's product suite into adjacent areas, including AI toolkits and content optimization, continues to boost average revenue per user and improves net revenue retention, benefiting both revenue and margin structure over time.
The company's deliberate pivot away from low-value, high-churn customer segments toward upmarket enterprise and AI-driven solutions is expected to improve customer retention, margin expansion (enterprise products have better unit economics), and free cash flow visibility.
With global digital marketing budgets growing and businesses continuing to prioritize omnichannel visibility and data-driven decision-making, Semrush's international footprint and AI/enterprise focus position it for durable revenue growth and eventual margin leverage despite current FX headwinds and near-term SMB softness.

Semrush Holdings Earnings and Revenue Growth

Semrush Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Semrush Holdings's revenue will grow by 16.2% annually over the next 3 years.
Analysts assume that profit margins will increase from -0.3% today to 12.4% in 3 years time.
Analysts expect earnings to reach $80.8 million (and earnings per share of $0.33) by about September 2028, up from $-1.3 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.3x on those 2028 earnings, up from -898.7x today. This future PE is lower than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to grow by 1.37% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.42%, as per the Simply Wall St company report.

Semrush Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The ongoing shift away from lower-end customers, such as freelancers and very small businesses, driven by high churn, decreasing marketing ROI, and rising customer acquisition costs, exposes Semrush to concentrated customer risk-if enterprise segment growth slows, overall revenue growth could materially decelerate.
The secular trend toward "AI mode" and "zero-click" search results (where fewer blue links appear and more answers are generated directly by search engines) may fundamentally diminish the value and volume of traditional SEO, eroding long-term demand for Semrush's core offerings, which would impact future revenue.
Greater dependence on large enterprise customers increases vulnerability to longer sales cycles, larger deal volatility, and heightened competition, putting upward pressure on customer acquisition and support costs, which could negatively affect net margins and earnings consistency.
The company's cost structure is exposed to significant foreign exchange risk (e.g., expenses denominated in euros with revenue in USD), meaning currency fluctuations-unless effectively hedged-can compress operating margins and reduce earnings, as seen in the recent guidance cut prompted by a weaker U.S. dollar.
Market commoditization driven by the proliferation of lower-cost or freemium SEO/SEM tools and competitors, especially as enterprises seek comprehensive end-to-end marketing platforms, may eventually drive down pricing power, increase churn, and create persistent margin pressure for Semrush, undermining long-term earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $10.833 for Semrush Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $13.0, and the most bearish reporting a price target of just $9.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $649.1 million, earnings will come to $80.8 million, and it would be trading on a PE ratio of 26.3x, assuming you use a discount rate of 8.4%.
Given the current share price of $7.73, the analyst price target of $10.83 is 28.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

AI-powered Search And LLM Interfaces Will Unlock Enterprise Potential