U.S. stocks edge higher; solid earnings season continues
Investing.com - UBS maintained its Buy rating on Warner Music Group (NASDAQ:WMG) with a price target of $38.00, citing expected benefits from structural changes in digital service provider payments and new monetization opportunities. The stock, currently trading at $29.85, shows mixed signals according to InvestingPro data, with technical indicators suggesting overbought conditions despite trading below the analyst target.
The firm expects Warner Music to show low-single-digit growth in the second half of fiscal 2025, with accelerating revenue growth in fiscal 2026 as new wholesale deals take effect, likely beginning in the second quarter of fiscal 2026.
UBS highlighted Warner’s cost discipline initiatives, noting the company targets $265 million in incremental annual savings by the end of fiscal 2027, with most savings expected to boost bottom-line results and expand margins.
For the third quarter of fiscal 2025, UBS forecasts total revenues of $1.58 billion, representing a 2% year-over-year increase, or flat on a constant currency basis.
The firm projects operating income before depreciation and amortization (OIBDA) to grow 5% on a constant currency basis to $339 million, representing margins of 21.5%, an improvement of 110 basis points compared to the same period last year.
In other recent news, Warner Music Group has been making headlines with several significant developments. The company announced a $1.2 billion joint venture with Bain Capital to invest in music catalogs, enhancing its position in the recording and publishing sectors. This partnership aims to leverage Warner’s global infrastructure and Bain Capital’s financial resources to expand the reach of music catalogs. On the financial front, Bernstein has raised Warner Music Group’s stock price target to $34, citing anticipated cost savings and a potential boost from a legal settlement with Frontier. The firm’s projections include increased OIBDA margins and digital revenue estimates.
Additionally, BofA has upgraded Warner Music Group’s stock rating to Neutral, acknowledging improved visibility in its subscription streaming business and a potential agreement renewal with TikTok. Despite some challenges, including lower-than-expected fiscal second-quarter results, JPMorgan has maintained an Overweight rating while adjusting its price target to $32. The analysts see potential for future growth, driven by wholesale pricing increases and a strong growth formula. These developments highlight Warner Music Group’s strategic moves and financial outlook, as noted by several investment firms.
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