Nucor earnings beat by $0.08, revenue fell short of estimates
On Monday, Guggenheim maintained a Buy rating on Spotify Technology SA (NYSE:SPOT) and increased its price target to $725 from the previous $675. The adjustment reflects updated estimates for currency impact, the timing of price increases, and marketplace contributions. The stock, currently trading at $648.25, has shown remarkable momentum with a 120% return over the past year according to InvestingPro data, and is now trading near its 52-week high of $663.55.
Analysts at Guggenheim revised their model for Spotify to account for the expected impact of currency fluctuations and the timing of price hikes in their revenue projections. They anticipate that a premium tier increase in recently launched audiobook markets, such as France and Germany, along with a broader price increase, likely including the U.S., will contribute to a more substantial growth in average revenue per user (ARPU) in the fourth quarter of 2025. The company’s strong revenue growth of 17.24% and robust financial health metrics support this outlook, as revealed in InvestingPro’s comprehensive analysis, which includes 18 additional key insights about the company’s performance.
Guggenheim also adjusted its forecast for Spotify’s two-sided marketplace, citing a belief that artists and their representatives will increasingly utilize the platform’s promotional tools. This, combined with an opportunity for expanded audiobook monetization following the recent court ruling in the case of Epic Games vs Apple (NASDAQ:AAPL), supports their decision to raise the price target.
Spotify acted on the ruling by submitting an app update on Sunday, May 9, that enables users to purchase audiobooks directly and top up their audiobook hours on premium subscriptions. The ruling currently applies to the U.S. market, with Apple filing an appeal.
Supporting the growth outlook, a report by Grandview Research highlighted the audiobook market’s current global revenue at $8.7 billion, with a 26% annual growth rate. Guggenheim sees Spotify’s role as the leading streaming audio provider allowing it to participate more broadly in this revenue growth and potentially accelerate consumer audiobook engagement beyond current forecasts.
In conclusion, Guggenheim analysts express confidence in Spotify’s platform becoming increasingly valuable, especially in a digital media marketplace with reduced friction. They reaffirm their Buy rating and justify the raised price target based on the higher estimates.
In other recent news, Spotify Technology SA’s financial performance and outlook have prompted varied responses from analysts. CFRA downgraded Spotify’s stock from Buy to Hold, reducing the price target to $610 due to concerns about valuation multiples and a less certain outlook for early 2025. The firm adjusted its revenue forecasts, projecting $18.1 billion for 2025 and $20.5 billion for 2026, with a cautious approach recommended until clearer growth visibility emerges. Conversely, UBS maintained a Buy rating with a $680 price target, acknowledging a slight slowdown in revenue growth but emphasizing subscriber growth and expanded gross margins. UBS projects €17.7 billion in revenue for 2025 and anticipates increased free cash flow generation.
Benchmark also reaffirmed a Buy rating with a $700 target, focusing on Spotify’s strategic decisions and anticipated user growth in the latter half of 2025. Pivotal Research raised its price target to $800, citing Spotify’s strong market position and potential for price increases while maintaining subscriber growth. The firm highlighted Spotify’s potential for service expansion and enhanced advertising capabilities.
Meanwhile, Rosenblatt made a minor adjustment to its price target, lowering it to $657 while maintaining a Neutral stance. The firm noted Spotify’s resilience in challenging economic conditions but expressed concerns about potential growth deceleration. These developments reflect a range of perspectives on Spotify’s future, with some analysts optimistic about growth opportunities and others urging caution due to market valuation concerns.
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