BofA Securities Bet on Spotify
BofA Securities analyst Jessica Reif Ehrlich boosted the price target of Spotify Technology S.A. SPOT to $315 from $265 while maintaining a Buy rating.
Confidence in Performance
Ehrlich projects Spotify’s first-quarter FY24 results to at minimum align with guidance, encompassing revenue, premium subscribers, and monthly active users.
Potential Share Repurchase Program
The analyst is optimistic about the company’s ability to kick off a share repurchase initiative, given its solid balance sheet and free cash flow trajectory. The speculated timing for this move would likely be post the announcement of Spotify’s new CFO, potentially fueling shares in the latter part of the year.
Financial Forecast Adjustments
Ehrlich made adjustments to the first-quarter forecast to reflect increased social costs, resulting in a lowered operating income projection of €121 million (down from €180 million).
Although CY24 estimates were slightly cut due to foreign exchange rate differences, Ehrlich upped the projections for CY25 and CY26. These revamps foresee a mid-teens revenue surge, accompanied by a 30.2% gross margin and a projected free cash flow of €2.57 billion in CY26.
Current Share Performance
Price Action: Spotify shares were seen up by 2.52% at $259.14 during the latest check on Wednesday.
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