Market Overview

Credit Suisse Upgrades Cheaper Spotify

Credit Suisse Upgrades Cheaper Spotify

Credit Suisse isn’t ready to add Spotify Technology SA (NYSE: SPOT) stock to its favorites playlist, but it did get less bearish, citing a now much lower share price in coming off its negative rating on Wednesday for a neutral stance.

The Analyst

Credit Suisse analyst Brian Russo upgraded Spotify from Underperform to Neutral, keeping a $120 price target on the stock.

The Thesis

The music streaming company has seen a “negative narrative” over its subscriber numbers since the summer, and there are expectations for a third-quarter subscriber count that falls short of expectations, Russo wrote in a note.

Investors have also been wary about the company’s investments in podcasting, which may not recoup revenue until the long-term, he said.

But, the market has now taken the negatives into account, Russo wrote, noting the stock has dropped in value nearly 30% over the past two months, and short interest is now at historical highs.

“We believe much of this narrative and expectations for a 3Q subscriber miss are now priced in at current levels,” Russo wrote. “Given this view, and with shares now trading below our target, we see a more balanced risk/reward profile.”

Price Action

At publication time, shares of Spotify were up 0.76% to $113.38.

Related Links:

Investors, Analysts Still Tuned In To Spotify

Spotify Reports Mixed Q2 Earnings, MAUs Up to 232M

Latest Ratings for SPOT

Oct 2019MaintainsBuy
Oct 2019MaintainsBuy
Oct 2019MaintainsHold

View More Analyst Ratings for SPOT
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Posted-In: Brian Russo Credit Suisse streamingAnalyst Color Upgrades Analyst Ratings Best of Benzinga


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