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On Monday, Morgan Stanley (NYSE:MS) reiterated its positive stance on Spotify Technology SA (NYSE:SPOT), maintaining an Overweight rating and a $670.00 price target. The firm’s analysts believe that the company’s competitive edge is strengthening due to its ongoing focus on technology-driven personalization in music and related services. They forecast a 14% to 17% revenue compound annual growth rate (CAGR) excluding foreign exchange impacts through 2028, based on their base and bull case scenarios. This optimism appears well-founded, as InvestingPro data shows Spotify has delivered impressive returns, with the stock up 108% over the past year and 50% in the last six months. The company’s current revenue growth stands at 18.31%.
The analysts highlighted that while their 2025 earnings estimates are broadly in line with the consensus, their earnings before interest and taxes (EBIT) projections for 2027 are approximately 10% higher than the market consensus. This optimism is rooted in the mega-trends they see driving transformation and disruption in the media and entertainment sector, which they believe positions market leaders like Spotify for continued success. According to InvestingPro, Spotify maintains strong financial health with a "GREAT" overall score, supported by robust cash flows that sufficiently cover interest payments. The platform offers 15+ additional insights about Spotify’s financial health and growth potential.
Spotify’s deepening competitive moat, according to Morgan Stanley, comes from the company’s dedicated approach to leveraging technology in personalizing its offerings. This strategic focus is seen as an underappreciated advantage that could drive the company’s market position forward.
The analysts also pointed out potential growth opportunities for Spotify, including the expansion of advertising revenue, video content, and artificial intelligence (AI) applications. These areas represent additional "call options" for the company, which could provide further upside.
Morgan Stanley’s price target of $670 and bull case target of $900 for Spotify shares reflect their confidence in the company’s ability to capitalize on these opportunities and execute its strategic initiatives effectively. The firm’s outlook for Spotify remains unchanged, signaling strong prospects for the audio streaming giant.
In other recent news, Spotify Technology SA has been the focus of several analyst updates and strategic moves. Cantor Fitzgerald analyst Deepak Mathivanan revised the price target for Spotify to $520, maintaining a Neutral rating, citing expected challenges in revenue and EBIT due to foreign exchange factors. KeyBanc Capital Markets also adjusted its price target to $625, keeping an Overweight rating, and emphasized Spotify’s potential for long-term pricing power through enhanced content offerings. Meanwhile, FBN Securities initiated coverage with a Sector Perform rating and set a price target of $645, highlighting strong growth potential in subscriber numbers and revenue.
Redburn-Atlantic upgraded Spotify from a Sell to a Neutral rating, raising the price target to $545, acknowledging growth prospects in audiobooks and premium offerings. The firm projected a more conservative EBIT growth compared to consensus estimates. Additionally, Spotify renewed its contract with podcast host Bill Simmons, reinforcing its commitment to podcast and video content despite earlier speculation about reduced investments in original podcasts. These developments reflect ongoing strategic adjustments and analyst perspectives on Spotify’s future performance and market positioning.
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