FMP
KeyBanc Maintains Overweight Rating on Spotify, Expects Bundles to Boost Profits
Jun 26, 2024 3:27 PM - Davit Kirakosyan
Image credit: FMP
KeyBanc analysts reiterated an Overweight rating and a $400 price target on Spotify (NYSE:SPOT) stock, highlighting the potential for Spotify's bundles to significantly boost operating profit starting in the third quarter.
The analysts noted that while the key determinant will be the bundle take rates, Spotify will have limited data by the time of its second-quarter earnings report. According to the analysts' calculations, if 50% of subscribers in Australia, the U.K., and the U.S. opt for the bundle, it could result in a 6-12% increase to his above-consensus operating profit forecast for Q3/24.
Overall, the analysts believe that bundles enhance lifetime value (LTV), which should give Spotify the flexibility to invest in growth while also improving profit margins.
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