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Investing.com - KeyBanc Capital Markets raised its price target on Spotify (NYSE:SPOT) to $860 from $640 while maintaining an Overweight rating on the music streaming service. The stock, which has delivered an impressive 136% return over the past year, is currently trading above its InvestingPro Fair Value, with a "GREAT" financial health score.
The investment firm acknowledged that Spotify’s upcoming second-quarter results, scheduled for July 29, and third-quarter guidance might show some variability related to foreign exchange rates, social charges, and seasonal gross margin dynamics. The company maintains healthy financials with a current ratio of 1.48x and strong revenue growth of 17% year-over-year.
KeyBanc advised investors to buy any near-term dips, emphasizing that its core investment thesis remains intact, centered on music being under-monetized in a price inflationary market with favorable competitive dynamics.
The firm highlighted several growth initiatives supporting its high-teens revenue growth outlook, including near-term opportunities like Superfan features and bundles, medium-term developments in audiobooks, advertising, and ticketing, and long-term projects such as Backstage.
KeyBanc’s new $860 price target represents 2027 estimated enterprise value-to-sales and enterprise value-to-free cash flow multiples of 6.0x and 32.7x, respectively.
In other recent news, several investment firms have adjusted their price targets for Spotify, reflecting various perspectives on the company’s growth prospects and challenges. Benchmark raised its price target to $840 while reducing its second-quarter revenue estimate to €4.2 billion, citing foreign exchange pressures. The firm also adjusted its gross margin forecast and operating income estimate due to regulatory headwinds and social charges. Bernstein also increased its price target to $840, citing Spotify’s pricing power and potential from superfan offerings, despite acknowledging foreign exchange headwinds. Goldman Sachs raised its target to $775, highlighting engagement and monetization opportunities, particularly in Super Premium and Video Podcasts. UBS set its target at $895, pointing to audiobook expansion and new subscription tiers as growth catalysts. Lastly, BofA Securities raised its target to $900, maintaining confidence in Spotify’s momentum despite acknowledging currency challenges affecting revenue forecasts. These developments indicate a generally positive outlook among analysts, with some caution due to external economic factors.
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