U.S. stocks edge higher; solid earnings season continues
Investing.com - BofA upgraded Warner Music Group (NASDAQ:WMG), the $15.37 billion market cap music entertainment company, from Underweight to Neutral on Wednesday, raising its price target to $33.00 from $28.00. The new target sits within the current analyst range of $28-$38.
The upgrade reflects improved visibility in Warner’s subscription streaming business following recent commercial agreements with digital service providers like Spotify (NYSE:SPOT), according to BofA’s research note.
BofA cited Warner’s cost savings announcement last week as another positive factor, stating these developments should provide "a clear path to healthier earnings growth" for the music company.
The investment bank’s new price target of $33 is based on approximately 12 times its revised higher calendar year 2026 OIBDA (Operating Income Before Depreciation and Amortization) estimates for Warner Music Group.
BofA also noted a potential catalyst in the coming quarters with an anticipated TikTok renewal agreement, which could lead to increased emerging streaming revenue for Warner Music Group.
In other recent news, Warner Music Group announced a joint venture with Bain Capital to invest up to $1.2 billion in music catalogs, enhancing its recording and publishing segments. This partnership, with equal equity commitments from both companies, aims to provide artists and songwriters opportunities to expand their catalogs’ reach. Bernstein SocGen Group reaffirmed its Outperform rating on Warner Music Group, citing the joint venture as a significant boost to the company’s financial outlook, with plans for approximately $300 million in annual cost savings. Meanwhile, Bernstein raised its price target for Warner Music to $34, highlighting cost savings and potential earnings growth in fiscal 2026.
JPMorgan, however, lowered its price target for Warner Music to $32, following the company’s fiscal second-quarter underperformance. The reduction is attributed to missed expectations and challenges such as market share loss in China and lighter release slates. Despite this, JPMorgan remains optimistic about Warner Music’s future, anticipating benefits from wholesale pricing increases and superfan tiers by 2026. Analysts at Bernstein SocGen Group also initiated coverage with an Outperform rating, noting the potential for Warner Music to capitalize on Spotify’s superfan subscription tier, which is expected to boost digital revenue growth in 2026. The firm’s leadership is seen as enhancing market share and execution capabilities, driving systematic margin expansion and significant growth in operating income before depreciation and amortization next year.
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