UPDATE: Spotify (SPOT) PT Lowered to $280 at Barclays

Barclays analyst Ross Sandler lowered the price target on Spotify (NYSE: SPOT) to $280.00 (from $310.00) while maintaining a Overweight rating.

The analyst comments "SPOT reported total MAUs, premium subs, and revenue in-line with consensus. 1Q revenue guidance also came in-line but gross margins and OI missed mostly due to a shift in investments that was originally planned for 4Q. FY guidance is no longer being provided (net adds for users and subs in FY22 is expected to be similar to that of FY21) as well as quarterly disclosure of churn (which was reportedly down y/y in 4Q), which will likely raise concerns from investors regarding the near term trajectory of the business beyond 1Q. However, management did announce an Investor analyst day planned for some time in the 2Q that should provide more clarity in terms of how the company will plan to achieve its LT goals of 1B MAUs, 20%+ revenue growth CAGR, and 30-40% gross margins (vs. the 27% in 2021). Despite the lower than expected gross margin guide in 1Q, the core business is showing continuous signs of leverage, which is prompting the company to invest towards future growth. As a result, we believe this will likely stall margin expansion in the near term, though agree it is the right move for sustainable future growth, especially given the competitive landscape. We remain OW and our price target goes down to $280."

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