Better-Positioned Than Netflix Says Raymond James, Upgrades Spotify to Outperform -Breaking
By Senad Karaahmetovic
Andrew Marok, a Raymond James analyst, upgraded Spotify (NYSE:), to Outperform based on positive risk-reward.
The new price target on Spotify stock is $150.00 per share, signaling an upside of roughly 34% compared to Friday’s closing price.
The analyst took note of a sharp selloff in SPOT shares, fueled by slower than expected scaling of the company’s podcasting business and light margin guidance.
“At these trading levels we believe that the bad news is priced in with relatively limited downside. Spotify continues to be a leading streaming audio platform. It has a large subscriber base and low levels of churn, making it a resilient name for streaming music. There are potential catalysts like its Investor Day. This could encourage optimism. We recognize that we might be early on this call, but current valuation offers margin for error, with opportunities for appreciation as sentiment normalizes,” Marok told clients in a note.
The analyst also prefers Spotify to Netflix (NASDAQ:) as the latter is in a “challenging” competitive position.
“We sense that Spotify has seen some blowback from Netflix’s poor performance, leading some to stay away from streaming media entirely. This ignores the key differences between Netflix and Spotify’s stories and landscapes. While Netflix faces increasing competition from a growing number of streaming services, the landscape for streaming music remains stable. Unlike video, where content owners are seeking to monetize their content by going directly to consumers, the commoditization of streaming music content actually works to Spotify’s benefit in this case,” Marok added.
Spotify shares are currently trading at over 4% higher than their pre-market Monday price, despite being down more than 50% year to date.