Deutsche Bank analyst provided their outlook on Warner Music Group Corp’s (NASDAQ:WMG) upcoming Q3 earnings results, noting the company’s share underperformance vs. UMG (its closest competitor) and NASDAQ in Q2 and into Q3 quarter-to-date.

The analysts attribute some of this underperformance vs. UMG to flight to the market leader particularly given Warner Music Group’s decelerating reported recorded music streaming revenue growth.

However, with the company starting to lap one-timers beginning next quarter (and more meaningfully in 2023), along with underlying growth starting to inflect positively, the analysts contend the Q3 could represent a clearing event, setting the stage for the valuation gap with Universal to narrow.