Spotify (SPOT) PT Lowered to $300 as Morgan Stanley Updates Base Case for Normalized Valuation and Margins

February 1, 2022 2:14 AM EST
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Price: $102.24 +0.93%

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Morgan Stanley analyst Benjamin Swinburne lowered the price target on Spotify (NYSE: SPOT) to $300.00 (from $350.00) adjusting his base case for normalized growth an margin levels.

The analyst reiterated the Overweight rating, stating "We are shaving some of the long-term margin potential out of our base case, lowering our price target to $300. This is supported by our DCF and assumes shares re-rate towards the historical average EV/ sales of 3.5x (and 12.5x EV/GP) and would put it in line with comps on a gross profit growth adjusted basis. We now expect gross margins/EBIT margins to reach ~30%/~6% respectively in 2025 and ~35%/~13% respectively in 2030. Note that Spotify's most recent long-term guidance is for 30-40% gross margins."

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