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On Tuesday, Benchmark analysts adjusted Spotify’s stock price target, lowering it from $720 to $700, while reaffirming their Buy rating on the company. The adjustment comes as Spotify prepares to announce its first-quarter earnings on April 29, before the market opens. The stock, currently trading at $591.38, has shown remarkable strength with a 105% return over the past year, though InvestingPro analysis suggests the stock is trading above its Fair Value.
The Benchmark analyst cited several potential revenue drivers for Spotify in the upcoming year, including a new premium tier subscription pricing, successful monetization of Spotify Audience Network (SAX) following its launch and testing with The Trade Desk (NASDAQ:TTD), and an anticipated increase in podcast profitability. These factors are expected to contribute to Spotify’s relative outperformance. According to InvestingPro data, the company maintains strong financial health with a current ratio of 1.88 and holds more cash than debt on its balance sheet.
In anticipation of the first-quarter earnings, Benchmark revised its operating income estimate for Spotify to €490 million, a decrease from the company’s guidance of €548 million. This revision accounts for an estimated social charge of approximately €76 million, which is about €58 million above the guidance figures provided by Spotify.
For the second quarter, Benchmark’s total revenue estimate for Spotify is 3% below the consensus, partially due to the recent strength of the Euro compared to the U.S. dollar. Despite these adjustments, the firm remains positive about Spotify’s stock, reiterating its Buy rating but with a reduced price target, reflecting an increased weighted average cost of capital (WACC).
In other recent news, Spotify Technology SA (NYSE:SPOT) has seen several analyst firms adjust their price targets and ratings. Morgan Stanley (NYSE:MS) maintains a positive outlook on Spotify, reiterating an Overweight rating with a $670 price target, citing the company’s focus on technology-driven personalization and potential growth areas like advertising and AI. Conversely, Cantor Fitzgerald lowered its price target to $520, maintaining a Neutral rating due to expected challenges from foreign exchange impacts and seasonal advertising costs. KeyBanc also reduced its price target to $625 while keeping an Overweight rating, highlighting Spotify’s subscription model and content offerings as key strengths. Meanwhile, FBN Securities initiated coverage with a Sector Perform rating and a $645 price target, emphasizing Spotify’s growth potential in the music streaming sector. In other company news, Spotify renewed its contract with podcast host Bill Simmons, ensuring his continued contribution to the platform’s podcast and video content strategy. Simmons will remain with Spotify for at least two more years, maintaining his role as head of talk strategy. This renewal underscores Spotify’s commitment to expanding its podcast and video offerings despite recent cutbacks in original content.
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