Analyst Ed Young of Morgan Stanley maintained a Buy rating on Universal Music Group (UMGNF – Research Report), with a price target of €29.00.
Ed Young’s rating is based on Universal Music Group’s robust financial performance in the fourth quarter of FY24, where the company reported revenues and adjusted EBITDA that surpassed market expectations. This strong performance was largely driven by a significant increase in subscription revenues, which grew by 7.2% year-over-year, excluding one-time items, and exceeded consensus expectations. Despite some challenges in ad-supported streaming, the overall positive results are expected to be well-received by the market.
Furthermore, the company has demonstrated strong growth in its recorded music segment, with a notable 9.1% increase in subscription revenues, supported by global subscriber growth and pricing benefits. Universal Music Group remains optimistic about its future growth prospects, maintaining its 8-10% CAGR expectation for 2024-2028. The company also anticipates continued momentum in subscription revenues, bolstered by recent pricing agreements with major digital service providers like Spotify and Amazon. These factors collectively contribute to Ed Young’s Buy rating for Universal Music Group’s stock.
In another report released today, UBS also maintained a Buy rating on the stock with a €30.00 price target.