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Investing.com - UBS raised its price target on Spotify (NYSE:SPOT) to $895.00 from $680.00 on Friday, while maintaining a Buy rating on the music streaming company’s shares. The stock, currently trading at $780.35, has surged over 73% year-to-date, though InvestingPro analysis indicates it may be trading above its Fair Value.
The investment firm cited several growth catalysts for Spotify, including the expansion of audiobooks into new markets, launch of new subscription tiers, price increases, and advertising growth that could enhance monetization and sustain approximately 16% foreign-exchange-neutral revenue growth through 2028. This outlook aligns with Spotify’s current revenue growth of 17.24% and strong financial health, maintaining more cash than debt on its balance sheet.
UBS expects Spotify’s growing mix of non-music verticals and cost discipline to drive further margin expansion, projecting 20% operating margins in 2027 compared to the Street consensus of 17.5%.
The firm also anticipates increased cash generation from these improvements, which could provide options for shareholder returns through various capital allocation strategies.
For the second quarter of 2025, UBS expects Spotify’s results to show continued mid-teens foreign-exchange-neutral revenue growth and annual margin expansion, though at a more moderate pace due to the lapping of prior price increases, partnership program rollouts, and other platform investments.
In other recent news, Spotify has seen several analysts raise their price targets, reflecting positive expectations for the company’s future performance. BofA Securities adjusted its revenue forecast for Spotify’s second-quarter results to €4.25 billion, slightly below the company’s guidance of €4.3 billion, while maintaining a Buy rating. Similarly, Guggenheim increased its price target to $840, emphasizing Spotify’s growth opportunities in audiobooks, podcasts, and app-store changes. Cantor Fitzgerald raised its price target to $640, citing a solid fundamental outlook despite some margin headwinds, and maintained a Neutral rating. Pivotal Research also raised its target to $900, highlighting Spotify’s strong global position and potential for subscriber growth. Jefferies set a new price target of $845, pointing to potential revenue and EBITDA growth from price increases and new service tiers. These developments indicate continued confidence in Spotify’s ability to expand and innovate within the streaming market.
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