Skip to main content

Market Overview

Evercore: Spotify's Risk-Reward Profile Makes Bull Thesis 'Difficult' To Justify

Evercore: Spotify's Risk-Reward Profile Makes Bull Thesis 'Difficult' To Justify

Heading into Spotify Technology SA (NYSE: SPOT)'s fourth-quarter earnings report Feb. 6, the streaming music company is "playing an uncertain tune" and investors are encouraged to "remain off the dance floor," according to Evercore ISI. 

The Analyst

Evercore ISI's Anthony DiClemente maintained an In-Line rating on Spotify with an unchanged $125 price target in a Jan. 9 note. 

The Thesis

Ongoing concerns surrounding competition, pricing power and content costs are likely to ease as Spotify approaches its Q4 print, DiClemente said in the note.

Third-party data from SensorTower suggests Spotify is seeing pressure from Apple Inc. (NASDAQ: AAPL) Music and other rivals, the analyst said. If Spotify comes up short on metrics, the Street's current 2019 outlook will look "increasingly aggressive," as it calls for no slowdown in subscriber growth, he said. 

Spotify may have benefited in Q4 from a weaker euro, although any benefits may be countered by growth in lower-priced regions, DiClemente said. Family plans continue to be a drag on organic average revenue per user, he said. 

Despite a certain degree of caution heading into Spotify's print, the company should show growth levels that are sufficient to support the view that it retains a "leading position in a large and growing" in the music space, according to Evercore.

 Nevertheless, it is difficult to conclude ahead of an uncertain Q4 and full year that Spotify stock offers a compelling enough risk-reward profile for investors relative to its music and video streaming peers, in the sell-side firm's view. 

Price Action

Spotify shares were up 2.41 percent at $129.67 at the time of publication Tuesday. 

Related Links:

The Street Is Watching Spotify's Outlook, Guggenheim Says In Neutral Turn

6 Music Stocks To Watch In 2019

Latest Ratings for SPOT

Apr 2021Evercore ISI GroupAssumesOutperform
Apr 2021CitigroupUpgradesSellNeutral
Apr 2021Wolfe ResearchInitiates Coverage OnPeer Perform

View More Analyst Ratings for SPOT
View the Latest Analyst Ratings


Related Articles (SPOT)

View Comments and Join the Discussion!

Posted-In: Anthony DiClemente Evercore ISI SensorTowerAnalyst Color Previews Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

DCredit SuisseMaintains90.0
IBKRCredit SuisseMaintains110.0
ANTruist SecuritiesMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at