Citi raised the firm’s price target on Spotify to $720 from $540 and keeps a Neutral rating on the shares. Over the past year, Spotify (SPOT) shares have far outpaced the music labels, but on the heels of new contracts between Spotify and the labels, some of this gap will narrow as labels have secured price escalators independent of Spotify’s average revenue per user, the analyst tells investors in a research note. In addition, Citi believes Spotify’s pending launch of a “Supremium” tier may help both Spotify and the labels. While all of this is good news for the sector, Warner “currently fetches a far lower multiple than either UMG or SPOT,” the firm adds. As such, it upgraded Warner Music to Buy.
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