BofA Bets On Spotify, Sees Scope For Share Repurchase Program Initiation After New CFO Announcement

BofA Securities analyst Jessica Reif Ehrlich raised the price target of Spotify Technology S.A. SPOT to $315 from $265 and reiterated the Buy rating.

The analyst is confident that the company’s first quarter FY24 results will be at least in line with guidance, including revenue, premium subscribers, and MAUs.

Also, the analyst writes that they are confident about sustainability of share price momentum led by subscriber growth, monetization opportunities, scaling of advertising and continued operating leverage.

Related: Spotify Raises Subscription Prices in France Following New Music Tax

Given the strong balance sheet and FCF trajectory, the analyst notes ample capacity to start a share repurchase program (likely after the new CFO announcement), which could be a share price driving factor in the second half.  

The analyst adjusted the first-quarter forecast to reflect higher social costs, lowering operating income to €121 million (from €180 million). 

The analyst slightly lowered CY24 estimates mainly due to foreign exchange adjustments. Meanwhile, the analyst raised the estimates for CY25 and CY26 forecasts, which imply mid-teens revenue growth with a gross margin of 30.2% and FCF of €2.57 billion in CY26.

Also Read: Spotify Brings Ed Sheeran, Doja Cat, Ice Spice And Other Music Videos In New Update, But There’s A Catch

Price Action: SPOT shares are up 2.52% at $259.14 on the last check Wednesday.

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