Spotify Technology SA SPOT shares climbed in early trading on Wednesday, after the company reported better-than-expected fourth-quarter results.
The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.
Morgan Stanley On Spotify Technology
Analyst Benjamin Swinburne maintained an Overweight rating, while lifting the price target from $250 to $270.
“The combination of record MAU and sub growth, broad price increases and declining opex puts Spotify in rarified air,” Swinburne wrote in a note. A good business has emerged from a good product, he added.
The analyst further stated that the company could approach $1 billion in profits in 2024.
Macquarie Research On Spotify Technology
Analyst Tim Nollen reiterated an Outperform rating while raising the price target from $232 to $300.
Spotify generated 20% year-over-year revenue growth in constant currency in the fourth quarter, “driven by 10m and 28m additional premium subscribers and MAUs, respectively,” Nollen said.
The company now has 379 million ad-supported listeners, which “drove $501m (+12% y/y) in ad revenue in 4Q, a record,” the analyst further stated.
Check out other analyst stock ratings.
JPMorgan On Spotify Technology
Analyst Doug Anmuth reaffirmed an Overweight rating while lifting the price target from $220 to $280.
Management guided to revenue growth re-acceleration, sequential expansion in gross and operating margins, and “meaningfully higher” free cash flows, Anmuth said in a note. “We’re encouraged Podcast Gross Margins are approaching breakeven & should flip positive for full-year 2024,” he added.
“MAUs (+23% Y/Y) & Premium Subscribers (+15% Y/Y) are also outperforming &, along w/price increases, will contribute to FXN Y/Y revenue growth acceleration in 2024,” the analyst further wrote.
Baird On Chipotle Spotify Technology
Analyst Vikram Kesavabhotla maintained an Outperform rating and price target of $225.
“The 4Q results were in line or above guidance across KPIs,” Kesavabhotla said. “Perhaps most notable is SPOT’s progress on profitability, as the business benefits from continued gross margin expansion and significant savings from recent restructuring initiatives,” he added.
The analyst further stated the company’s first-quarter guidance was “encouraging,” with operating income significantly higher than the consensus estimates.
Goldman Sachs On Spotify Technology
Analyst Eric Sheridan reiterated a Neutral rating and price target of $235.
Spotify’s management focused on three things during the call, Sheridan said. The first was to remain focused on “driving growth in 2024 and beyond with the audio platform continuing to scale in terms of product capabilities and geographic scale,” the analyst stated.
There was a renewed focus on driving operational efficiencies and “continued focus on scaling its offering around podcast and audiobook opportunities and increasing the scale of its global advertising efforts — all with an aim toward compounded advertising revenue growth and improved ad-supported gross margin,” he added.
SPOT Price Action: Shares of Spotify Technology had risen by 4.21% to $241.09 at the time of publication on Wednesday.
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