Spotify Technology (SPOT) – Get Report shares rose after Credit Suisse analyst Brian Russo raised his rating on the audio streamer to outperform from neutral and lifted his share-price target to $315 from $215.
Spotify recently traded at $253.72, up 3.6%. The shares have soared 70% year to date.
The company may exceed consensus forecasts for monthly active users and subscribers through 2021, Russo wrote in a commentary cited by Bloomberg. He boosted his subscriber projection for 2021 by 4 million to 185 million.
Spotify will benefit from exclusive podcasts, with Joe Rogan’s podcast by itself potentially generating an additional 5 million subscribers by the end of next year, Russo said. Spotify’s partnership with Russian mobile carrier MTS also should help.
Furthermore, “we now see a greater likelihood that major labels will participate in Spotify’s Marketplace and help expand gross margins, a change from our prior view” Russo said.
Morningstar analyst Ali Mogharabi expresses cautious optimism for Spotify.
“While monetization requires further improvement, we are pleased with Spotify’s investments in content to bring in more listeners and possibly initiate a network effect among them, the content providers, big record labels, and advertisers,” he wrote in a July 29 commentary.
“However, behemoths such as Apple, (AAPL) – Get Report Google (GOOGL) – Get Report and Amazon (AMZN) – Get Report still pose a threat that could strengthen if those firms increase their investments in audio streaming offerings. Overall, we commend Spotify’s content and listener acquisition strategy, especially on the podcast side of its business.”
Mogharabi puts fair value for Spotify at $156, recommending investors wait for a pullback before buying.