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

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

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

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

 

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