Spotify price target raised to $430 from $400 at Deutsche Bank

Deutsche Bank analyst Benjamin Black raised the firm’s price target on Spotify to $430 from $400 and keeps a Buy rating on the shares. The company reported a strong Q2, highlighted by gross margins that again came in well above expectations on flow through from the recent price increases as well as growth in marketplace, the analyst tells investors in a research note. The firm says the margin outperformance supports its belief that recent price increases were largely treated as an audiobook surcharge with less participation from the labels. With unit economics inflecting positively, the bear thesis around structural margin constraints associated with Spotify’s business model should fade, contends Deutsche Bank. The firm sees a “clear runway for ongoing positive earnings revisions for Spotify.”