Spotify upgraded to Buy from Hold at Deutsche Bank

Deutsche Bank analyst Benjamin Black upgraded Spotify to Buy from Hold with a $180 price target. The analyst views the post-earnings selloff as overdone. Investors are taking a “shoot first, ask questions later” approach following the year-to-date rally and with the pricing catalyst now in the rearview mirror, the analyst tells investors in a research note. However, the firm came away from the earnings report “modestly more constructive,” saying Spotify’s top-of-funnel metrics continue to outpace expectations, Q3 gross margin guidance came in above consensus, and operating losses narrowed again. With the price increases mostly impacting the model in the Q4, the company’s operating cost discipline remaining intact, easing year-over-year expense compares, ongoing momentum in active users and a conservative premium net addition guide, estimates remain biased to the upside, contends Deutsche Bank.