Goldman Sachs Upgrades Spotify to Buy, Lowers Price Target to $700
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Source: Benzinga
- Stock Pullback Opportunity: Analyst Eric Sheridan upgraded Spotify from Neutral to Buy and lowered the price target from $735 to $700, arguing that recent stock weakness has created an attractive entry point ahead of the company's fourth-quarter earnings.
- Revenue Growth Potential: Sheridan expects Spotify to achieve mid-single-digit annual average revenue per user (ARPU) growth over the next decade through regular subscription price hikes and the rollout of new premium tiers, driving steady revenue growth.
- Gross Margin Expansion Path: The analyst projects Spotify can expand gross margins by 80 to 100 basis points annually over the next three to four years, leveraging improved music royalty economics and better utilization of fixed podcast costs to enhance profitability.
- Long-Term Growth Outlook: Sheridan views Spotify as well-positioned to benefit from generative AI adoption, projecting mid-teens annual revenue growth driven by subscriber expansion in emerging markets, with the recent share price pullback providing a favorable investment opportunity.
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Analyst Views on SPOT
Wall Street analysts forecast SPOT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SPOT is 750.79 USD with a low forecast of 525.00 USD and a high forecast of 900.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
21 Analyst Rating
15 Buy
6 Hold
0 Sell
Moderate Buy
Current: 511.700
Low
525.00
Averages
750.79
High
900.00
Current: 511.700
Low
525.00
Averages
750.79
High
900.00
About SPOT
Spotify Technology SA a Luxembourg-based company, which offers digital music-streaming services. The Company enables users to discover new releases, which includes the latest singles and albums; playlists, which includes ready-made playlists put together by music fans and experts, and over millions of songs so that users can play their favorites, discover new tracks and build a personalized collection. Its users can either select Spotify Free, which includes only shuffle play or Spotify Premium, which encompasses a range of features, such as shuffle play, advertisement free, unlimited skips, listen offline, play any track and audio. The Company operates through a number of subsidiaries, including Spotify LTD and is present in over 20 countries. Its service offers a music listening experience without commercial breaks.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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