Market Overview

Deutsche Bank Holds Spotify, But Names 4 Ways It Could Turn Bullish On The Streaming Service

Deutsche Bank Holds Spotify, But Names 4 Ways It Could Turn Bullish On The Streaming Service
This Day In Market History: Edison Invents The Phonograph
8 Biggest Price Target Changes For Friday
Indian Music App Gaana Topping The Charts (TalkMarkets)

Is streaming music provider Spotify Technology (NYSE: SPOT) the next Netflix, Inc. (NASDAQ: NFLX)? The answer is no — for now,  according to Deutsche Bank.

The Analyst

Analyst Lloyd Walmsley initiated coverage of Spotify with a Hold rating and $155 price target.

The Thesis

Investors should hold a bullish stance on the music industry as a whole, but the bullish case for Spotify's stock is difficult to make right now, Walmsley said in the initiation note. Spotify doesn't boast any form of content differentiation, and a lack of visibility around long-term margins implies that a comparison to "Netflix 2.0" is unjustified, the analyst said. (See Walmsley's track record here.) 

The case for being more positive on Spotify could be made in the future, but only if the company satisfies the following conditions, Walmsley said:

  • Considerable market share growth.
  • The introduction of new proprietary content that consumers value.
  • Diversification away from the major music labels.
  • A pullback in the stock's valuation.

Instead of Spotify, investors may want to consider Europe-listed Vivendi, which the analyst said is better positioned to benefit from the continued shift of music to streaming platforms.

Price Action

Spotify shares were up 1.19 percent at the time of publication Thursday morning. 

Related Links:

Why YouTube Is Focused On Music Streaming

Spotify's First Earnings Report On Wall Street: The Sell-Side Reacts

Latest Ratings for SPOT

Nov 2018Wells FargoMaintainsMarket PerformMarket Perform
Nov 2018JP MorganMaintainsOverweightOverweight
Nov 2018BarclaysMaintainsOverweightOverweight

View More Analyst Ratings for SPOT
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Lloyd Walmsley Streaming music VivendiAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (NFLX + SPOT)

View Comments and Join the Discussion!

Latest Ratings

CMAB. Riley FBRDowngrades84.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Mid-Morning Market Update: Markets Open Higher; Michaels Companies Issues Weak Forecast

What The Latest Steam Gaming Data Means For AMD, Nvidia