On Monday, Canaccord Genuity maintained a positive outlook on Spotify Technology SA (NYSE:SPOT), raising its price target on the company's shares to $560 from the previous $525. The firm's decision to increase the target follows Spotify's performance in November, where the stock saw an approximate 24% rise.
According to InvestingPro data, SPOT has delivered an impressive 164% return over the past year, with the stock currently trading near its 52-week high of $489.69.
The music streaming giant reported its third-quarter results, which showed that Monthly Active Users (MAUs) and Premium Subscribers numbers were largely in line with market expectations. Revenue growth remained robust at 18.5% year-over-year, with total revenue reaching $16.8 billion. The company's gross margin stands at 28.7%, and InvestingPro analysis indicates strong financial health with 10 analysts revising their earnings upward for the upcoming period.
The analyst noted that Premium revenue growth had accelerated on a constant currency basis. Additionally, Spotify has experienced minimal customer attrition in the six markets where it has recently implemented price hikes. The company's ongoing efforts to build its own advertising exchange, which is aimed at bolstering performance-based services, was highlighted as a key strategic move. The year 2025 is anticipated to be a pivotal testing period for this new venture. With a market capitalization of $96.4 billion and strong cash flows that sufficiently cover interest payments, Spotify demonstrates solid financial fundamentals.
Spotify has also been active in expanding its business model, launching the Spotify Partner Program. This initiative is designed to provide creators with the opportunity to earn more from their audio and video content. Another significant development is Spotify's recent partnership with Emirates, which will see the integration of Spotify's media offerings into the airline's in-flight entertainment system.
This positive assessment from Canaccord Genuity underscores Spotify's continued growth and innovation in the digital music and media space. The company's strategic initiatives and partnerships are contributing to its sustained financial performance and market position.
In other recent news, Spotify Technology SA has seen a series of adjustments to its stock price targets following robust third-quarter results.
Citi analyst increased Spotify's stock price target to $500, maintaining a neutral stance. This adjustment reflects changes in Citi's valuation model, including extending the valuation year and incorporating Spotify's net cash and investments. TD Cowen also raised Spotify's target to $416, noting the company's promising margin progress.
Canaccord Genuity increased its price target for Spotify from $475 to $525, citing the company's solid performance and significant improvement in gross margins and operating profit. Similarly, Piper Sandler raised its price target to $450, highlighting the company's strong profitability results and guidance. Benchmark also increased Spotify's target to $520 due to the company's substantial growth in its premium subscription service.
Spotify's premium subscription business demonstrated significant growth, with the average revenue per user (ARPU) increasing by 11% year over year. The company's user base also grew by 14 million, reaching 640 million, while subscribers rose by 6 million to total 252 million. For the fourth quarter, the company anticipates continued growth, projecting an increase in Monthly Active Users (MAU) to 665 million and subscribers to 260 million.
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