Warner Music Group stock to benefit from structural changes, UBS says

Investing.com - UBS has reiterated a Buy rating and $40.00 price target on Warner Music Group (NASDAQ:WMG), currently trading at $34.06, citing expected benefits from structural changes in digital service provider (DSP) payments. The stock has shown strong momentum with an 11.85% gain year-to-date, and InvestingPro data shows 4 analysts have recently revised their earnings estimates upward.

The investment bank remains constructive on WMG shares, forecasting that the company will capitalize on new monetization opportunities, market share gains, and cost discipline in fiscal 2026 and beyond. With a market capitalization of $17.75 billion and analyst targets ranging from $30 to $46, WMG maintains a solid financial position despite trading near its Fair Value according to InvestingPro analysis.

UBS expects fiscal 2026 to show accelerating revenue growth as new wholesale deals take effect, which the firm anticipates will occur in the second quarter of fiscal 2026.

The firm is maintaining its fiscal fourth-quarter and 2026 estimates, projecting total revenues of $1.68 billion in the fiscal fourth quarter, up 2% year-over-year on a foreign-exchange neutral basis.

UBS forecasts operating income before depreciation and amortization (OIBDA) to grow 6% on a foreign-exchange neutral basis to $373 million, representing 22.2% margins, an increase of 50 basis points year-over-year.

In other recent news, Warner Music Group reported its Q3 2025 earnings, missing the earnings per share (EPS) forecast significantly with an EPS of $0.03 compared to the expected $0.29, marking an 89.66% miss. However, the company surpassed revenue expectations, reporting $1.69 billion against a forecast of $1.59 billion, resulting in a 6.29% surprise. Following these results, several financial firms adjusted their price targets for Warner Music Group. BofA Securities raised its price target to $36, maintaining a Neutral rating, while Goldman Sachs increased its target to $31, also keeping a Neutral stance. Tigress Financial Partners raised its price target to $45, citing accelerating streaming subscription growth and improved operating efficiencies, maintaining a Buy rating. Additionally, Bernstein SocGen Group increased its price target to $35, highlighting Warner Music Group’s sustained profitability and market share gains. These developments reflect varied analyst perspectives on Warner Music Group’s financial outlook.

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