Spotify Technology SA SPOT fourth-quarter results are likely to reflect continued healthy subscriber growth, with sequential improvement in average revenue per user, according to BofA Securities.
The Spotify Technology Analyst: Jessica Reif Ehrlich maintained a Buy rating on Spotify Technology and raised the price target from $357 to $428.
The Spotify Technology Thesis: The company’s performance in the latest quarter is likely to have been boosted by price hikes in seven test markets and market expansion into new geographies, Reif Ehrlich said in the Wednesday upgrade note.
The analyst named the following as Spotify Technology’s near-term drivers:
- "The Joe Rogan Experience" exclusivity as of Dec. 1, 2020.
- Higher interest following the company’s annual "Wrapped" campaign in December.
- Integration of Megaphone, which was acquired from Graham Holdings Co GHC.
- Opportunities in podcasting.
- Improvement in advertising as the economy recovers.
- Spotify’s launch in South Korea in the first half of 2021.
“We believe substantial capacity exists for continued SPOT gross margin growth and equity value creation,” she said.
SPOT Price Action: Shares of Spotify Technology were trading 1.35% higher at $317.91 at last check Wednesday.
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