KeyBanc raises Spotify stock target to $675, keeps Overweight rating

On Wednesday, KeyBanc Capital Markets adjusted its outlook on Spotify Technology SA (NYSE:SPOT), increasing the price target to $675 from the previous $600, while maintaining an Overweight rating on the company’s shares. The stock, currently trading near its 52-week high with a market capitalization of $124.79 billion, has delivered an impressive 178% return over the past year according to InvestingPro data. The decision comes amid Spotify’s significant strides in improving its operating margins, which have grown from a negative 5.6% in 2022 to a positive 8.7% in 2024.

According to KeyBanc analyst Justin Patterson, Spotify’s ability to expand its operating margins is a sign of the company’s success in leveraging its music and non-music investments to boost user engagement and pricing power. Patterson emphasized that focusing solely on quarter-over-quarter gross margin and operating margin percentages overlooks the larger strategic gains made by Spotify.

Spotify’s consistent revenue growth, which is expected to remain between 17-18% annually, has bolstered KeyBanc’s confidence in the company’s financial trajectory. The firm also anticipates that Spotify’s introduction of new products and advancements in its advertising capabilities could potentially accelerate growth to surpass the 20% target.

The revised price target of $675 is based on KeyBanc’s projections for Spotify’s enterprise value to sales (EV/S) and enterprise value to free cash flow (EV/FCF) in 2026, which are estimated at 6.1 times and 35.5 times, respectively. The Overweight rating reaffirms KeyBanc’s positive stance on Spotify’s stock, reflecting an expectation for the company’s market performance to outperform the average market return. With revenue growing at 18.31% and analysts forecasting continued profitability, investors seeking deeper insights can access comprehensive valuation analysis and 20+ additional ProTips through InvestingPro’s detailed research reports.

In other recent news, Spotify Technology SA has seen a series of price target increases following its robust fourth-quarter results. Cantor Fitzgerald analyst, Deepak Mathivanan, lifted the price target from $480.00 to $600.00 while maintaining a neutral rating. This adjustment was influenced by Spotify’s Q4 results surpassing expectations in revenue, gross profit, and operating income, along with a significant overachievement of its user and subscriber guidance.

Meanwhile, Guggenheim Securities raised its Spotify stock target to $675 from $520, retaining a buy rating. The firm’s confidence in Spotify’s potential for subscriber growth, monetization, and profitability was reinforced by the Q4 results and management’s forward-looking statements.

Canaccord Genuity analyst, Maria Ripps, increased the Spotify stock target to $700 from the previous $650, maintaining a buy rating. The adjustment came after Spotify reported strong Q4 results, surpassing guidance expectations in several key areas, including user growth, premium subscribers, total revenue, and gross margins.

Morgan Stanley (NYSE:MS) reaffirmed its confidence in Spotify, increasing the company’s price target to $670 from the previous $550, while sustaining an overweight rating on the shares. Analyst Benjamin Swinburne emphasized Spotify’s potential to significantly enhance subscriber economics through diversification beyond music streaming.

Lastly, Barclays (LON:BARC) analyst Kannan Venkateshwar increased the Spotify stock target to $710 from the previous $475, maintaining an overweight rating. Venkateshwar believes Spotify’s recent performance and guidance will support consistent growth throughout the year, with potential contributions from the introduction of video podcasts, expansion of programmatic ad auctions, and the launch of a new premium tier targeted at "super fan" audiences.

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