Spotify Analyst Draws Comparison To Apple On Scale, Pricing
More Wall Street analysts rerated Spotify Technology (NYSE:SPOT) and raised their price targets after the company reported an upbeat quarterly print Tuesday.
Spotify reported an EPS of $1.88, below the analyst estimate of $2.06. The company reported sales of $4.53 billion (4.24 billion euros), up by 16%, topping the consensus estimate of $4.15 billion.
- Rosenblatt analyst Barton Crockett downgraded Spotify from Buy to Neutral and raised the price target from $473 to $658.
- Morgan Stanley analyst Benjamin Swinburne maintained Spotify with an Overweight and raised the price target from $550 to $670.
- Goldman Sachs analyst Eric Sheridan reiterated a Buy on Spotify with a price target of $695, up from $550.
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Rosenblatt: Spotify is executing very well, but revenue growth after an impressive step up in 2024 will likely decelerate in 2025. Explosive operating margin expansion is driven by headcount reductions and leverage on copyright royalties as a percentage of revenues normalizes to more regular levels. In this environment, there’s less scope for multiple expansion and earnings upside.
Crockett estimates that Spotify’s 2025 constant currency revenue growth can be 15.5%, 14.5% in 2026E, and 13% in 2027E, driven by normalized mid-single-digit effective ARPU growth, ~ 10% average subscriber growth trending towards 8%, and ad growth accelerating into the double digits.
The analyst expects gross margin improvements to slow to 130 bps in …
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