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Investing.com - Deutsche Bank has reiterated its Buy rating on Spotify (NYSE:SPOT) with a price target of $775.00, citing potential revenue and profit growth from subscription price increases. This target represents a significant upside from Spotify’s current price of $583.99, though the stock has already delivered a strong 33.86% return year-to-date. According to InvestingPro data, analyst targets for the streaming giant range from $495.70 to $910.46.
The bank’s analysis suggests a standard $1 per month (8%) price increase could lift Spotify’s 2026 revenue by approximately 2% compared to fiscal year 2025 estimates, with similar impacts on gross profit and a 5% boost to operating income. Spotify has demonstrated solid revenue growth of 11.89% over the last twelve months, reaching $19.84 billion.
Deutsche Bank also examined a scenario where Spotify raises only its Premium tier price while keeping Music-only subscription costs unchanged, which would yield a comparable 2% revenue increase but with higher 60-70% incremental margins, potentially increasing gross profit by 4% and operating income by 9% from 2025 levels. InvestingPro analysis shows Spotify currently maintains a "GREAT" financial health score of 3.13, with strong cash flow metrics and a PEG ratio of 0.81, suggesting reasonable valuation relative to growth. Spotify is among 1,400+ US equities with comprehensive Pro Research Reports that transform complex data into actionable intelligence.
A more bullish scenario analyzed by the bank involves Spotify raising Premium tier prices by $2 per month and Music-only subscriptions by $1 per month, with the music-only increase split according to historical revenue share agreements.
This more aggressive pricing strategy could generate nearly 5% higher revenue, 10% increased gross profit, and a substantial 22% boost to operating income, according to Deutsche Bank’s calculations.
In other recent news, Spotify reported its third-quarter results, which exceeded expectations with revenue outperforming by 1% and operating income surpassing estimates by 16%. The company’s total gross margin stood at 31.6%, slightly above prior guidance, thanks to adjustments in rights holder accruals after recent agreements. Despite these positive results, Spotify’s fourth-quarter revenue guidance fell 1% below consensus, primarily due to weaker ad-supported revenue and subscription forecasts. Benchmark raised its price target for Spotify to $860, citing strong premium ARPU, while Cantor Fitzgerald adjusted its target to $675, maintaining a Neutral rating. Rosenblatt, however, lowered its price target to $670, also with a Neutral rating, due to delayed ad growth.
Spotify’s expansion into five Asia-Pacific markets with its Premium Platinum tier was noted, although these markets contribute a small percentage to its subscriber base. Bernstein SocGen Group reiterated an Outperform rating with an $830 price target, reflecting a positive outlook on the company’s future performance. Additionally, Spotify announced that CFO Christian Luiga would present at the 2025 Morgan Stanley European Technology, Media & Telecom Conference, with a webcast available for investors.
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