Music streaming company Spotify Technology SA (SPOT) received mixed reviews from analysts after delivering successful Q4 results. Optimistic bulls highlight the company’s solid performance in 2024, marked by its first full-year profit and strong growth potential. However, some analysts view the Q4 results as mixed and remain cautious about future growth. Overall, analysts maintain a Strong Buy rating on SPOT stock, though its share price growth is limited after an impressive 180% surge over the past 12 months.
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To recap, SPOT saw a 12% year-over-year increase in monthly active users (MAU) to 675 million and an 11% rise in paying subscribers to 263 million in Q4. This growth enabled Spotify to report a Q4 profit of €367 million.
Analysts Express Mixed Views
After reporting its fourth-quarter and full-year 2024 results, SPOT stock garnered four Buy ratings and two Hold ratings from analysts yesterday.
BofA analyst Jessica Reif Ehrlich raised Spotify’s stock price target from $515 to $700, maintaining a Buy rating. BofA highlighted Spotify’s strong Q4 performance, with nearly all key metrics exceeding their expectations. Additionally, Ehrlich pointed out the company’s strong balance sheet and growing free cash flow, which provide significant potential for capital returns in the near term.
Similarly, Jeffrey Wlodarczak of Pivotal Research remains bullish, raising his price target from $615 to $725. Pivotal stated that Spotify’s solid results, despite its premium pricing compared to other music streaming platforms, is a solid proof that the company is solidifying its dominance in the industry.
On the other hand, Doug Creutz at TD Cowen mentioned concerns about future growth, particularly with the projected decline in gross margin for Q1 2025, signaling potential challenges after recent improvements. Creutz reiterated its Hold rating on the stock, forecasting a downside of 26.5%. He added that the SPOT stock price target was increased to reflect Spotify’s favorable results, but the Hold rating remains, reflecting caution due to ongoing uncertainties.
Is Spotify a Good Stock to Buy?
SPOT stock holds a consensus Strong Buy rating from 29 Wall Street analysts, including 22 Buys and seven Holds. The Spotify average share price target of $543.60 suggests a downside of 12.6% from its current price.
