By Sam Boughedda
KeyBanc Capital raised its price target for Spotify (NYSE:SPOT) to $160 from $140 per share, maintaining an Overweight rating on the stock in a note to clients Tuesday.
Analysts told investors in the firm's Spotify Q1 earnings preview that the move to adjust the price target follows Spotify disclosing that it surpassed ~500 million monthly active users (MAUs) in early March. In addition, the firm's Audio Survey and 3P data points "reinforce momentum."
"U.S. Audio Survey and third-party data reinforce MAU upside - Search queries in the U.S. and worldwide accelerated 15 points and 5 points, respectively, on a two-year stack basis. We also saw a 3-point increase in our survey for Spotify usage, placing it at a five-quarter high," the analysts wrote.
As a result of the higher subscriber base and ad forecast, KeyBanc increased its revenue and gross profit expectations for Spotify by 1% for 2023E/2024E to €13.6B/€15.9B (€1 =$1.0968) and to €3.5B/€4.4B.
For Q1, they "expect in-line revenue and gross margin (GM), with MAU upside. We project €3.10B in revenue (in line with guide), 24.9% GM (in line with guide), and €180M op loss (€14M better than guide)," the analysts added.
Meanwhile, in Q2, they "expect in-line revenue, better subs and MAUs, and in-line op loss. We project €3.27B in revenue (in line with Street), 25.1% GM (40 bps below Street), and €134M op loss (€2M better than Street). Further, we expect MAUs of 513M (vs. Street's 511M) and Premium Subs of 214M (vs. Street's 213M)."