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Analysts have raised Spotify’s price targets, citing robust subscriber growth, improved product differentiation and engagement, and greater pricing power despite near-term cost headwinds, leading to a consensus Analyst Price Target increase from $739.83 to $756.18.

Analyst Commentary

• Bullish analysts are raising price targets on expectations of continued price increases in key markets and further upward revisions to long-term revenue and profit estimates.
• Improved product differentiation through free tier changes, expanding product momentum, and driving higher user engagement and monetization are seen as positive catalysts.
• Despite recent revenue headwinds from currency moves, softness in ad business, and higher operating investment, analysts cite robust subscriber growth, improving engagement, pricing power, and capital return prospects as drivers of higher valuations.
• Updated analyst models reflect the ability to absorb rising music content costs, margin expansion potential, and upside from app-store changes and the expansion of audio formats like podcasts and audiobooks.
• Bearish analysts have tempered short-term expectations due to elevated investment cycles and near-term operating costs, but recent share price pullbacks are increasingly viewed as attractive buying opportunities for long-term investors.

What's in the News

• Apple is making a push to convert listeners to paying Apple Music subscribers by distributing its six curated radio stations globally through a deal with TuneIn, aiming to close the gap with Spotify, which currently leads in music streaming (Wall Street Journal).
• Spotify’s co-president indicated that price increases are forthcoming, but emphasized that these will be paired with the rollout of new services and features to justify the higher cost (Financial Times).
• Phillip Securities upgraded Spotify to Neutral from Reduce, highlighting robust user and subscriber growth, but noted that near-term profitability is challenged by increased investments and operating costs.
• DoorDash has recruited Spotify’s head of advertising as its new Chief Revenue Officer, indicating talent movement from Spotify's executive ranks (Axios).

Valuation Changes

Summary of Valuation Changes for Spotify Technology

• The Consensus Analyst Price Target has risen slightly from $739.83 to $756.18.
• The Future P/E for Spotify Technology has significantly risen from 51.26x to 60.21x.
• The Consensus Revenue Growth forecasts for Spotify Technology remained effectively unchanged, moving only marginally from 12.8% per annum to 13.0% per annum.