The Record Company Behind Lizzo And Dua Lipa Has Several Tailwinds Ahead

Warner Music Group Corp. WMG seems poised to benefit from certain secular tailwinds over the next couple of years, according to Goldman Sachs Group. GS.

The Analyst: Stephen Laszczyk initiated coverage of Warner Music Group with a Buy rating and a price target of $32.

The Thesis: The company, which represents Lizzo and Dua Lipa, could benefit from growth in subscriptions, ad-supported streaming and new licensing opportunities presented by emerging multimedia platforms, Laszczyk explained.

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"We see several potential catalysts that could support valuation over the next 12 to 24 months, including: a re-acceleration in “Core” streaming revenue growth driven by the successful commercialization of upcoming album releases, new emerging streaming contract renegotiations, and broad-based pricing increases at DSPs; accretive record label or music rights catalog acquisitions; and upward revisions to 2023+ consensus estimates,” the analyst wrote.

“From an execution perspective, we see opportunity for Warner Music Group to expand adjusted EBITDA margins, improve FCF conversion, and accretively allocate excess capital,” he added.

See Also: Where Warner Music Group Stands With Analysts

WMG Price Action: Shares of Warner Music Group had declined by 0.63% to $22.21 at the time of publication Tuesday.

Image: Lizzo, courtesy of WMG.com