Analyst James Heaney CFA from Jefferies maintained a Buy rating on Spotify Technology SA (SPOT – Research Report) and increased the price target to $730.00 from $540.00.
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James Heaney CFA’s rating is based on Spotify’s impressive Q4 performance, which exceeded expectations in several critical areas. The company’s gross margin and premium net additions surpassed guidance, with 675 million monthly active users compared to an anticipated 665 million, and 11 million premium net additions against a forecast of 8 million, showcasing strong user growth even amidst recent price increases.
Furthermore, Spotify’s operational income was notably higher than market expectations, reflecting effective expense management and operational leverage. Despite a conservative Q1 guidance on monthly active users, the focus on higher lifetime value subscribers and expected gross margin expansion by FY25 indicates a strategic emphasis on profitability and sustainable growth. These factors, combined with ongoing investments in product development, such as the video product, suggest potential for future revenue acceleration, justifying the Buy rating.
In another report released today, Barclays also maintained a Buy rating on the stock with a $710.00 price target.