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On Wednesday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in Spotify Technology SA (NYSE:SPOT), as analyst Benjamin Swinburne increased the company’s price target to $670 from the previous $550, while sustaining an Overweight rating on the shares. The new target sits well above the current stock price of $621.77, though InvestingPro data shows the stock is trading near its 52-week high of $623.40. Swinburne emphasized the robustness of the music streaming market and Spotify’s leading product offering as foundational to the company’s long-term earning potential.
In his analysis, Swinburne highlighted that Spotify’s successful 2024 performance validated the company’s growth trajectory and its ability to raise pricing and monetization levels, seemingly independent of competitive pricing strategies. The company’s impressive 178.51% return over the past year and robust revenue growth of 18.31% support this view. He also noted Spotify’s potential to significantly enhance subscriber economics through diversification beyond music streaming.
Spotify’s expansion into a wider entertainment spectrum, including podcasts, audiobooks, video, and education, is seen as a key driver for future market share gains. The analyst underscored Spotify’s capability to leverage this broadening range of services to achieve greater long-term earnings than previously estimated.
The year 2024 stood as a testament to Spotify’s strategic initiatives, proving the company’s capacity to not only navigate but also set industry trends. According to Swinburne, Spotify demonstrated an eagerness and ability to elevate its pricing and monetization, as well as to improve subscriber economics through its evolving service offerings. InvestingPro analysis reveals the company maintains a "GREAT" overall financial health score, with particularly strong momentum metrics. Subscribers can access over 20 additional ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.
Morgan Stanley’s revised price target reflects an optimistic outlook for Spotify as it continues to fortify its position within the broader entertainment landscape. The firm’s analysis suggests that Spotify is well-positioned to defend its market share and capitalize on the opportunities presented by its diverse product suite.
In other recent news, Barclays (LON:BARC), Raymond (NSE:RYMD) James, Canaccord Genuity, KeyBanc Capital Markets, and Citi have all increased their price targets for Spotify. Barclays analyst Kannan Venkateshwar has lifted the target to $710, citing the company’s strong quarterly performance, potential revenue growth from new developments such as video podcasts, programmatic ad auctions, and a new premium tier for "super fan" audiences. Raymond James raised its target to $650 in response to Spotify’s robust quarterly results and promising growth areas for 2025.
Canaccord Genuity also set a new target at $650, noting Spotify’s healthy user and subscriber growth, recent price hikes, and operating leverage. KeyBanc Capital Markets increased its target to $600, anticipating continued momentum in subscriber growth, revenue, and margins in Spotify’s fourth-quarter results. Citi lifted its target to $540 ahead of Spotify’s upcoming fourth-quarter earnings report, focusing on the company’s capital allocation strategies, product enhancements, and the implications of its agreement with Universal Music (AS:UMG).
In their analysis, these firms highlighted Spotify’s strong performance and potential for future growth. However, they also acknowledged the challenges and competition in the market. This information is based on recent developments and reflects the views of the mentioned analyst firms.
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