Warner Music Group (WMG – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Jessica Reif Ehrlich from Bank of America Securities reiterated a Sell rating on the stock and has a $30.00 price target.
Jessica Reif Ehrlich has given her Sell rating due to a combination of factors affecting Warner Music Group’s performance. One of the primary concerns is the softening in ad-supported streaming, which is being impacted by macroeconomic volatility, leading to reduced advertising spend from major partners like YouTube. Despite some positive developments, such as the passing of the worst FX headwinds and a new multi-year deal with Spotify that improves economic terms, these are not enough to offset the challenges in the ad-supported segment.
Additionally, Ehrlich has lowered revenue and operating income forecasts for Warner Music Group, reflecting the anticipated slowdown in the ad-supported streaming sector. The company’s current market performance, while somewhat defensive, still faces uncertainties that prevent a more optimistic outlook. The reiteration of the Underperform rating and a price objective of $30 suggest that more evidence of sustainable growth in digital streaming is needed before a more favorable rating can be considered.