On Wednesday, a KeyBanc analyst maintained a positive outlook on Spotify Technology SA (NYSE:SPOT), reiterating an Overweight rating and a price target of $440.00. The analyst's confidence in Spotify's growth prospects was bolstered by Universal Music Group's (AS:UMG) investor day held on Tuesday, September 17, where UMG projected at least 1 billion paid music subscribers worldwide by 2028.
According to the analyst, the forecast aligns with their own projections and suggests that the market consensus underestimates Spotify's potential growth. They have set a target of 353 million Spotify subscribers by 2028, a figure that does not account for any market share gains over the next five years, which they consider a conservative estimate given Spotify's continuous product innovation.
UMG's investor day also highlighted potential industry pricing actions, with an estimated compound annual growth rate (CAGR) of 4-5% from 2023 to 2028. This indicates that the introduction of new subscription plans, such as a premium tier, along with more frequent price hikes, could serve as key drivers for growth in the industry.
The analyst's reiterated price target and rating reflect a belief in Spotify's ability to capitalize on these industry trends and potentially increase its subscriber base significantly by 2028. This outlook suggests a stable future for Spotify's stock amidst a dynamic and evolving music streaming landscape.
In other recent news, Spotify Technology SA has experienced significant developments in its financial performance and analyst ratings. KeyBanc analyst has raised the price target for Spotify shares to $440 from $420, maintaining an Overweight rating. The analyst's evaluation suggests that Spotify could surpass 1 billion monthly active users and 400 million Premium Subscribers by 2030, reflecting a positive outlook on the company's potential for user growth and earnings power.
In addition, Cantor Fitzgerald initiated coverage on Spotify with a neutral rating, recognizing Spotify's impressive year-to-date performance and positive adjustments to gross profit and earnings. Evercore ISI also raised its price target for Spotify to $460 from $420, maintaining an Outperform rating, based on Spotify's robust financial performance and strong free cash flow.
Rosenblatt Securities adjusted its price target for Spotify to $399.00 from the previous $396.00, following Spotify's recent financial performance report, revealing revenues of €3,807 million and a substantial increase in premium subscribers.
In other recent developments, the chief executives of Meta Platforms Inc (NASDAQ:META). and Spotify have expressed concerns over the European Union's regulatory environment for open-source artificial intelligence, arguing that Europe's complex and fragmented regulations are stifling innovation.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Spotify Technology SA's (NYSE:SPOT) financial landscape. The company currently holds a market capitalization of approximately $68.71 billion. Despite a high P/E ratio of 130.24, the adjusted P/E ratio for the last twelve months as of Q2 2024 is lower at 85.06, which could indicate that investors are expecting earnings to grow. This aligns with one of the InvestingPro Tips, which suggests that Spotify's net income is anticipated to increase this year. Moreover, the company's revenue growth remains robust, with a 16.5% increase over the last twelve months as of Q2 2024, and a quarterly revenue growth rate of 19.83% for Q2 2024.
Looking at the stock's performance, Spotify has experienced a significant 1-year price total return of 114.86%, and it's trading near its 52-week high, at 95.21% of that peak. These metrics underscore the company's strong market performance and could be a signal to investors about the stock's momentum. Additionally, one of the InvestingPro Tips highlights that Spotify's stock price movements are quite volatile, which may be relevant for investors seeking opportunities in dynamic market conditions. For those interested in a deeper dive into Spotify's financial health, InvestingPro offers a range of additional tips (16 more available at https://www.investing.com/pro/SPOT) to help make informed investment decisions.
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