U.S. stocks edge higher; solid earnings season continues
Investing.com - Benchmark raised its price target on Spotify (NYSE:SPOT) to $840.00 from $700.00 on Thursday, while maintaining a Buy rating on the music streaming giant. The new target sits within the current analyst range of $470-$911, with the stock already delivering an impressive 136.77% return over the past year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
The research firm reduced its second-quarter total revenue estimate to €4.2 billion from €4.3 billion, citing approximately 2 percentage points of additional foreign exchange pressure compared to guidance. This adjustment comes as Spotify maintains strong revenue growth of 17.24% over the last twelve months, with the company’s next earnings report scheduled for July 29.
Benchmark also lowered its third-quarter gross margin forecast by 40 basis points to 31.1%, reflecting a sequential regional regulatory headwind similar to last year, with new pricing leverage expected to be fully offset by organic product investments in areas like SPP, SAX, and audiobooks.
Despite these near-term adjustments, Benchmark maintained its 2025 gross margin estimate at 31.8%, suggesting better-than-expected leverage prospects entering 2026, particularly if SAX monetization begins to accelerate.
The firm reduced its second-quarter operating income estimate to €428 million versus guidance of €539 million to account for approximately €111 million in additional social charges, noting Spotify’s stock has risen nearly 40% since its first-quarter report.
In other recent news, Spotify has seen a series of analyst upgrades, reflecting optimism about its future growth prospects. Bernstein raised its price target to $840, highlighting Spotify’s pricing power and potential benefits from superfan offerings. Despite anticipated foreign exchange headwinds, Bernstein expects positive outcomes from user metrics and price increases. Goldman Sachs increased its price target to $775, citing engagement and monetization opportunities, particularly through Super Premium and Video Podcasts. UBS also raised its target to $895, driven by Spotify’s expansion into audiobooks and advertising growth, projecting significant revenue growth through 2028. BofA Securities set a new price target of $900, expressing confidence in Spotify’s second-quarter results, although they adjusted revenue forecasts slightly due to currency impacts. Guggenheim raised its target to $840, emphasizing the potential of Spotify’s pricing power and tier expansion, along with growth in audiobooks and podcasts. These developments suggest a positive outlook from various analysts on Spotify’s business trajectory.
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