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On Wednesday, Guggenheim Securities updated its outlook on Spotify Technology SA (NYSE:SPOT), increasing the price target to $675 from the previous $520 while retaining a Buy recommendation on the shares. The decision comes after Spotify released its fourth-quarter earnings, which surpassed key performance indicators and provided guidance indicating further growth in the first quarter of 2025. The company’s strong performance is reflected in its impressive 18.31% revenue growth and current market capitalization of $125.65 billion. According to InvestingPro data, Spotify has received upward earnings revisions from three analysts for the upcoming period.
The company’s management has expressed a positive outlook for the year, focusing on accelerated execution, leading product development, and investments in its core music offerings. They also aim to continue improving gross and operating margins through efficiency efforts. Spotify’s user growth exceeded expectations in the fourth quarter, with a record number of monthly active user (MAU) net additions, which is expected to boost premium subscription conversions throughout 2025. InvestingPro analysis shows the company maintains a strong financial health score of 3.23 (rated as "GREAT"), with a healthy current ratio of 1.88 indicating solid operational efficiency.
Spotify’s engagement with U.S. subscribers, particularly in automotive environments, now ranks just behind AM/FM radio, signaling a strong appreciation for the service among consumers. Management has also highlighted mutually beneficial partnerships with music labels, indicating plans to significantly enhance the music offering in the coming year.
The analyst from Guggenheim noted that the fourth-quarter results and management’s forward-looking statements have reinforced their confidence in Spotify’s potential for subscriber growth, monetization, and profitability. The firm’s "Best Idea" designation for Spotify remains in place alongside the upgraded price target.
In other recent news, Spotify has made headlines with robust fourth-quarter results and positive future growth projections. Canaccord Genuity analyst Maria Ripps increased the price target for Spotify shares to $700, maintaining a buy rating. Spotify’s Q4 results surpassed guidance expectations, leading to record-breaking free cash flow and significant growth in monthly active users, premium subscribers, total revenue, and gross margins.
Morgan Stanley (NYSE:MS) also reaffirmed its confidence in Spotify, as analyst Benjamin Swinburne increased the price target to $670, highlighting Spotify’s ability to raise pricing and monetization levels while diversifying its service offerings. Barclays (LON:BARC) analyst Kannan Venkateshwar echoed this optimism, increasing the price target for Spotify shares to $710, citing the company’s successful expansion into video podcasts and the introduction of a new premium tier targeted at "super fan" audiences.
Raymond (NSE:RYMD) James increased the price target for Spotify shares to $650 due to strong quarterly results and promising growth areas for 2025, such as the introduction of video podcasts and a super-Premium subscription tier. Earlier, Canaccord Genuity had also increased the price target for Spotify shares to $650, citing healthy user and subscriber growth, the beneficial impact of recent price hikes, and the company’s operating leverage as contributing factors. These recent developments underscore a promising future for Spotify, as reflected in the revised price targets and positive analyst outlooks.
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