JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
On Thursday, JPMorgan analysts adjusted their outlook on Warner Music Group (NASDAQ:WMG) stock, reducing the price target to $32 from $38 while maintaining an Overweight rating. The decision follows Warner Music’s recent performance, with shares declining 7% since the company reported its fiscal second-quarter results on May 8. Currently trading at $26.34, the stock sits near its 52-week low of $25.56, according to InvestingPro data, which shows five analysts have recently revised their earnings expectations downward.
The underperformance is attributed to lower consensus estimates after Warner Music missed expectations in the fiscal second quarter. The company also withdrew its RM subscription streaming guidance for the year, citing specific challenges such as a loss of market share in China and a lighter release slate. Additionally, recent headlines concerning label negotiations with music AI firms have reportedly impacted investor sentiment. Despite these challenges, InvestingPro’s comprehensive analysis indicates the company remains profitable with annual revenue of $6.33 billion, though its current ratio of 0.66 suggests some liquidity constraints.
Despite these challenges, JPMorgan analysts see potential for optimism. Warner Music’s shares are trading near trough levels, approximately 12 times its adjusted operating income before depreciation and amortization (AOIBDA), compared to one- and two-year averages of 13.1 and 13.7 times, respectively. The company has provided expectations for similar RM trends in the third and fourth fiscal quarters and noted A&R growth exceeding the pace of fiscal 2024.
Looking ahead to 2026, the analysts anticipate a more favorable outlook for Warner Music. The company is expected to benefit from wholesale pricing increases and superfan tiers, which could provide additional upside. Warner Music continues to leverage a strong growth formula driven by higher global music streaming penetration, significant pricing gain opportunities, and a scalable model. While currently trading at elevated P/E and P/B multiples, the company maintains consistent profitability and has demonstrated its commitment to shareholder returns through five consecutive years of dividend increases.
In other recent news, Warner Music Group reported its second-quarter earnings for 2025, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.07, falling short of the anticipated $0.29, while revenue reached $1.48 billion against the forecasted $1.52 billion. These results were attributed to weaker-than-expected growth in subscription and ad-supported streaming revenues, leading Warner Music to revise its subscription streaming revenue growth forecast for the full fiscal year 2025. In response to these developments, Goldman Sachs downgraded Warner Music Group from "Buy" to "Neutral" and reduced the stock’s price target from $35.00 to $28.00. The downgrade was influenced by Warner Music’s weaker market share performance and macroeconomic factors affecting advertising revenue. On a different note, Bernstein SocGen Group initiated coverage on Warner Music Group with an Outperform rating, setting a price target of $32.00. The firm highlighted Warner Music’s strong management team and strategic initiatives, including potential benefits from Spotify (NYSE:SPOT)’s upcoming superfan subscription tier. These varied analyst perspectives reflect the ongoing challenges and opportunities faced by Warner Music Group in the current market environment.
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