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On Wednesday, Pivotal Research updated its assessment of Spotify Technology SA (NYSE:SPOT), increasing the price target from $725.00 to a new high of $800.00, aligning closely with InvestingPro’s analyst consensus high target of $800.15. The firm maintained its Buy rating on the shares of the audio streaming giant, which has delivered an impressive 105.7% return over the past year. The revision follows a detailed analysis of Spotify’s market position and potential growth strategies.
The research firm’s analyst cited several factors for the optimistic outlook, including an increase in premium monthly active user (MAU) forecasts for 2025 and beyond. The company’s strong financial health is evident in its metrics, with InvestingPro data showing robust revenue growth of 17.2% and healthy liquidity ratios. Adjustments were also made to the valuation to account for the favorable movement of the Euro relative to the U.S. dollar. The valuation now considers a terminal value in 2030, aligning with the approach taken for Netflix (NASDAQ:NFLX), another company with a Buy rating from Pivotal Research.
Spotify’s target terminal EBITDA multiple for 2030 was conservatively reduced from 18X to 16X, despite the expectation that the company will be growing its EBITDA by approximately 20% at that time. Current EBITDA stands at $1.96 billion, with the company maintaining strong cash flows that comfortably cover interest payments. This change was incorporated into the discounted cash flow (DCF) valuation methodology used by Pivotal Research, ultimately leading to the increase in the year-end 2025 target price. For deeper insights into Spotify’s valuation metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
Pivotal Research highlighted Spotify’s dominant position in the global audio streaming market, attributing it to the company’s superior user interface, product, and recommendation engine. This competitive edge, according to the firm, allows Spotify to raise prices while still achieving solid subscriber growth. The firm also noted Spotify’s potential to expand its services and products, enhance its advertising capabilities, and possibly venture into live programming, which could further improve user engagement and monetization.
The analyst also pointed out that Spotify, similar to Netflix, could serve as a cost-effective entertainment option, particularly in a weakening economic climate. The reiterated Buy rating reflects confidence in Spotify’s continued success and growth trajectory.
In other recent news, Spotify Technology SA’s first-quarter earnings report for 2025 has drawn varied reactions from financial analysts. Rosenblatt Securities maintained a Neutral rating on Spotify, slightly adjusting the price target to $657, citing the company’s resilience in challenging economic conditions but noting potential volatility due to anticipated growth deceleration. Cantor Fitzgerald also kept a Neutral rating, raising the price target to $610, acknowledging Spotify’s consistent revenue and subscriber growth but pointing out a slight shortfall in operating income due to additional social costs. Meanwhile, JPMorgan increased its price target to $670, retaining an Overweight rating, and projected improvements in gross and operating margins despite some expected fluctuations due to growth investments.
Wells Fargo (NYSE:WFC) expressed a bullish stance, maintaining a $740 price target and an Overweight rating, highlighting Spotify as a Top Pick for its potential in revenue and subscriber growth, particularly through improved trading terms with record labels. Raymond (NSE:RYMD) James adjusted its price target to $635 while maintaining an Outperform rating, noting a stable outlook despite a slight revenue shortfall influenced by foreign exchange rates. Analysts from various firms have emphasized Spotify’s robust gross margins and its strategic initiatives aimed at enhancing revenue per subscriber and expanding its content offerings. These recent developments reflect a diverse range of perspectives on Spotify’s financial performance and future trajectory as the company continues to navigate the competitive music streaming industry.
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