With Spotify Technology (SPOT) trading near an all-time high, the streaming music leader received a price-target increase on Wednesday from an equity analyst.
Evercore ISI’s Anthony DiClemente reiterated his outperform rating on Spotify stock and raised his price target to 200 from 190. It rose 0.3%, near 181, in midday trading on the stock market today.
Spotify went public on April 3, ending its first day at 149.01. It hit an all-time high of 182.45 on June 22. In intraday trading on Wednesday, Spotify stock reached 181.70.
DiClemente raised his estimates for Spotify users and subscribers in the second quarter. Based on that, he expects Spotify to deliver strong revenue growth of 28.5% year over year in the second quarter.
Spotify Earnings Due July 26
The Stockholm-based company is scheduled to report second-quarter results before the market open on July 26.
“We continue to think Spotify fundamentals are analogous to those of Netflix (NFLX), despite business model differences, as both are global, dominant subscription streaming platforms,” DiClemente said.
He expects Spotify to have ended the June quarter with 83 million paying users and 180 million total users, including its ad-supported service tier.
Spotify ended the March quarter with 75 million paying subscribers and 170 million total active users. Its biggest rival is the Apple Music service from Apple (AAPL), which has been gaining fast in subscribers.
While Spotify has a comfortable lead worldwide, Apple Music reportedly has passed it in subscribers in the U.S. market, DiClemente said.
“The key debate surrounding Spotify’s long-term potential revolves around its evolving relationship with (the music) labels,” he said. “Bulls contend that Spotify stands to disrupt the current paradigm and should see gross margins improve over time. Bears are concerned that given the concentrated supplier power of the major labels, that Spotify’s long-term profit potential is limited.”
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