Street Calls of the Week
Investing.com - BNP Paribas Exane initiated coverage on Spotify (NYSE:SPOT) with an Outperform rating and a $900.00 price target on Tuesday. According to InvestingPro data, Spotify maintains a "GREAT" financial health score and has achieved profitability over the last twelve months, with a return on equity of 15%.
The investment firm cited Spotify’s position as a category creator with strong net promoter scores and global market leadership against big tech competitors in its segment.
BNP Paribas Exane noted that while Spotify has struggled with profitability historically and underperformed the Nasdaq from its listing through 2023, recent strategic changes in stakeholder relationships and product mix have transformed it into a "quality business and attractive investment."
The firm views Spotify’s valuation as "undemanding" with approximately a 25% discount to Netflix on EV/GP FY27 metrics, considering its sustainable mid-teens revenue growth potential.
BNP Paribas Exane projects high-teens gross profit growth and over 30% EPS growth for Spotify, which it describes as "the best in our coverage" particularly compared to European large cap names.
In other recent news, Spotify Technology SA reported its Q2 2025 earnings, which fell short of analysts’ expectations for both earnings per share and revenue. This development reflects a significant miss in projected financial performance. Additionally, Spotify announced plans to introduce a messaging feature across both its free and premium subscription tiers. This feature aims to enhance user interaction by allowing users to chat and share music with individuals they have previously interacted with on the platform. In related developments, Guggenheim reiterated its Buy rating on Spotify stock, maintaining a price target of $850. The firm expressed confidence in Spotify’s product development efforts, including the new messaging feature, as well as DJ mix functionality and Instagram song previews. These initiatives are seen as strategies to bolster growth beyond 2026. Spotify’s ongoing efforts to enhance its platform and attract more users come as part of its competitive strategy in the streaming audio market.
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