Spotify's Price Increases and Improved Metrics Signal Growth Potential, Analyst Upgrades Stock
Portfolio Pulse from Anusuya Lahiri
Deutsche Bank analyst Benjamin Black upgraded Spotify Technology SA (NYSE:SPOT) from Hold to Buy with a $180 price target. The upgrade is due to outperforming metrics, 3Q gross margin guide beating consensus, and narrowed operating losses. Black expects ARPU to improve from 3Q onward with pricing as a growth driver. The price increase is expected to drive about 40bps of gross margin improvement from leverage on streaming delivery costs. FY23 operating income forecast decreased due to higher write-downs and increased FX headwinds.
July 26, 2023 | 5:38 pm
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Spotify's stock has been upgraded by Deutsche Bank from Hold to Buy with a $180 price target. The upgrade is due to outperforming metrics, 3Q gross margin guide beating consensus, and narrowed operating losses. However, FY23 operating income forecast decreased due to higher write-downs and increased FX headwinds.
The upgrade by Deutsche Bank is a positive signal for Spotify's stock. The analyst's optimism is based on outperforming metrics, 3Q gross margin guide beating consensus, and narrowed operating losses. However, the decrease in FY23 operating income forecast due to higher write-downs and increased FX headwinds could potentially offset some of the positive impact.
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