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On Tuesday, Raymond (NSE:RYMD) James made an adjustment to Spotify’s (NYSE:SPOT) financial outlook, reducing the price target to $635 from the previous $650, while maintaining an Outperform rating on the company’s shares. Currently trading at $582.45, Spotify has demonstrated remarkable strength with a 109% return over the past year and maintains a "GREAT" financial health score according to InvestingPro analysis. The firm’s analyst, Andrew Marok, provided insights following Spotify’s first-quarter earnings report for the year 2025, which presented a blend of strengths and weaknesses.
Marok pointed out that despite a quarter-over-quarter decline in ad-supported Monthly Active Users (MAUs) that appeared concerning at first, the situation is mitigated by factors that do not pose long-term concerns. He highlighted the tough comparison with a successful Wrapped campaign in the fourth quarter of 2024 and a notable conversion of subscribers in emerging markets, which contributed to the dip in free user numbers. With revenue growth of 18.3% in the last twelve months and strong cash flows exceeding interest payments, the company’s fundamentals remain solid according to InvestingPro data.
Revenue for Spotify came in slightly below expectations, and foreign exchange rates are beginning to impact reported figures negatively. However, Marok emphasized that the company’s gross margins have remained robust at 30.25%. The expectations for the company’s performance in 2025 have seen little change, signaling a stable outlook, though InvestingPro notes that 4 analysts have recently revised their earnings estimates downward. For deeper insights into Spotify’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst’s commentary suggested a balanced perspective, acknowledging elements that could be interpreted positively or negatively by investors. Nonetheless, Raymond James stands by its optimistic view of Spotify’s future. The firm believes that the audio streaming giant is on a steady path to further dominate the subscription music market and is making promising advancements in new content areas such as audiobooks and video podcasting.
As Spotify navigates through the challenges and opportunities of the current market, the company’s efforts to expand its offerings and maintain solid margins are key factors that Raymond James believes will support its ongoing growth and market position.
In other recent news, Spotify Technology SA is drawing attention with several analyst updates and financial forecasts. Benchmark has adjusted its price target for Spotify to $700 from $720, maintaining a Buy rating, as the company prepares to announce its first-quarter earnings. The firm anticipates a decrease in operating income estimates due to additional social charges, while expecting revenue drivers like new premium subscriptions and increased podcast profitability to bolster performance. Similarly, Morgan Stanley (NYSE:MS) has reiterated its Overweight rating with a $670 price target, projecting a 14% to 17% revenue growth rate through 2028 and highlighting Spotify’s competitive edge in personalization and potential growth in advertising and AI applications.
Cantor Fitzgerald has lowered its price target to $520, maintaining a Neutral rating, citing foreign exchange challenges impacting revenue and EBIT projections, though subscriber additions are expected to meet forecasts. KeyBanc Capital Markets also reduced its price target to $625 but continues to support Spotify with an Overweight rating, noting enhancements in content offerings and AdTech stack as drivers of user engagement and monetization. Lastly, FBN Securities initiated coverage with a Sector Perform rating and a $645 price target, emphasizing Spotify’s value proposition and long-term growth potential in the subscription music streaming sector. These developments indicate varied perspectives on Spotify’s financial outlook and strategic initiatives.
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