Things weren’t looking good for music streamer Spotify (NASDAQ:SPOT) for some time now. However, the stock made a nice recovery today thanks to reconsidered opinions from both Atlantic Equities and Wells Fargo (NYSE:WFC). Spotify’s fortunes turned around first with Wells Fargo. Analyst Steven Cahall upgraded the company from “equal weight” to “overweight” and also hiked the price target from $121 per share to $180.
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The sudden boost followed Cahall’s assessment that Spotify is rapidly moving toward “margin improvement.” As a result, Cahall now looks for Spotify to be “…break-even in 1Q24.” However, he stopped short of becoming a “perma bull” on Spotify thanks to macroeconomic considerations that will hamstring the whole industry for a while.
Atlantic Equities’ Hamilton Faber also hiked Spotify from “equal weight” to “overweight,” citing issues of valuation that were “…well below historical levels.” Further, Faber also pointed out that Spotify’s “non-music initiatives” were picking up steam and giving margins a boost accordingly. The notion that ad market rates appear to have bottomed out suggests the worst may be over, and recovery may follow fairly soon, adding a boost to margins that way. Spotify’s recent move to call in regulatory help may give it a further hand if all goes according to plan.
Wall Street seems to agree with these two. Analyst consensus calls Spotify stock a Moderate Buy with an average price target of $130.63, implying 6.12% upside potential.