Spotify, the Communication Services sector company, was revisited by a Wall Street analyst yesterday. Analyst Benjamin Swinburne from Morgan Stanley reiterated a Buy rating on the stock and has a $800.00 price target.
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Benjamin Swinburne has given his Buy rating due to a combination of factors, primarily focusing on Spotify’s strategic price increases across more than 100 markets. These price adjustments are expected to drive growth in average revenue per user (ARPU) by 3-4% excluding foreign exchange effects, which is a positive indicator for the company’s financial health.
Moreover, the unique pricing strategy in Australia, where Spotify has implemented a second price increase on its audio bundle, highlights the company’s potential for higher incremental margins. This move is seen as a precursor to further monetization strategies, such as ad-free video podcasts, which could significantly enhance ARPU and gross margins in the coming years. These strategic initiatives form the basis of Swinburne’s optimistic outlook on Spotify’s stock.
In another report released on August 15, Deutsche Bank also reiterated a Buy rating on the stock with a $775.00 price target.