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Investing.com - Bernstein SocGen Group raised its price target on Spotify (NYSE:SPOT) to $840.00 from $825.00 on Tuesday, while maintaining an Outperform rating on the music streaming giant. The stock, currently trading at $736.29, has delivered an impressive 134.7% return over the past year and sits near its 52-week high of $785. According to InvestingPro data, Spotify’s financial health score is rated as "GREAT."
The firm cited Spotify’s "underappreciated pricing power" and potential upside from superfan offerings as key factors behind the modest target increase, according to a research note published Tuesday.
Bernstein expects foreign exchange headwinds to moderately impact Premium ARPU and top-line growth compared to guidance for the remainder of the year, though user metrics and benefits from price increases should deliver positive results.
The research note highlighted that deferred taxes from TME appreciation should cushion earnings from higher social charges resulting from Spotify’s approximately 30% stock price increase during the quarter.
Bernstein anticipates Spotify will guide third-quarter gross margins below Street expectations, primarily due to recurring regulatory charges, but noted the company’s cash balance likely exceeds €5 billion, potentially enabling shareholder returns or the launch of a superfan-focused subscription tier.
In other recent news, Spotify has seen a series of analyst upgrades regarding its stock price target. Goldman Sachs raised its target to $775, citing growth prospects in Super Premium and Video Podcasts, and maintained a Buy rating. UBS also increased its target to $895, emphasizing the expansion of audiobooks and new subscription tiers as key growth drivers, while projecting 20% operating margins by 2027. BofA Securities set a new target of $900, noting potential momentum in Spotify’s key performance indicators, though it adjusted revenue expectations due to foreign exchange impacts. Guggenheim raised its target to $840, highlighting the positive impact of currency changes and Spotify’s pricing power. Lastly, Cantor Fitzgerald adjusted its target to $640, maintaining a Neutral rating and expressing confidence in Spotify’s ability to manage revenue through strategic pricing. These developments reflect a broad optimism among analysts about Spotify’s growth trajectory and financial health.
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