The world’s largest on-demand audio platform, which is very much diving into the podcast arena, saw its shares rise on a largely down Tuesday thanks to an upgrade courtesy of UBS.
Spotify‘s 1-year target price was hiked to $274 per share, as UBS raised its rating on “SPOT,” which trades on the NYSE, to “Buy” from “Neutral.” The price target adjustment is significant, as it is up from the prior level of $170.
In an interview for Yahoo! Finance, Alexandra Canal shared how UBS sees sustainable margin expansion and stronger bottom-line trends in the coming year for Spotify.
This is driven by several key factors, including strong subscriber loyalty, advertising growth, and steady price increases.
But, Canal notes that Spotify has “really struggled with that valuation question.” There’s also a lack of profitability, due to the enormous royalty payments it must pay for the right to allow its users to stream music.
EBITDA is “finally in positive, solid territory,” though, Canal notes, and that’s a big plus for the streamer. Podcasts are expected to break even in the first half of 2024, with $1 billion spent over the past few years to build the segment.
One year ago, SPOT was priced at $121.17; as of 11:26am Eastern it was priced at $219.75, up $1.14 on word of the UBS report.
