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Investing.com - UBS downgraded Universal Music Group NV (AS:UMG) (OTC:UMGNF) from Buy to Neutral on Wednesday, setting a price target of EUR30.00.
The music entertainment company’s shares have risen 24% year-to-date in USD terms, recovering beyond levels seen before disappointing second-quarter results last year, according to UBS.
UBS noted that 2025 started positively for Universal Music Group, with the company securing new "Streaming 2.0" deals with major platforms Spotify (NYSE:SPOT) and Amazon (NASDAQ:AMZN) while benefiting from accelerated growth in paid streaming volumes.
Despite maintaining a positive outlook on Universal Music Group’s long-term growth potential and its ability to deliver on management’s September 2024 guidance of over 10% EBITDA CAGR for 2023-2028, UBS believes these factors are now fully reflected in the share price.
The downgrade comes as Universal Music Group shares trade at a 3.0% 2025 estimated free cash flow yield, which UBS notes is in-line with RELX (2.9%) and at a premium to Wolters Kluwer (AS:WLSNc) (3.8%).
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