Spotify (SPOT) PT Raised to $325 at CFRA

CFRA analyst Kenneth Leon raised the price target on Spotify (NYSE: SPOT) to $325.00 (from $242.00) while maintaining a Hold rating.

The analyst comments "We raise our target by $83 to $325 using a forward P/E of 67.0x our '24 earnings estimate, below the five-year historic average of 78.0x. We increase our 2024 EPS estimate to €4.85 from €2.40 and 2025's to €6.30 from €3.95. SPOT posted Q1 2024 EPS of €0.97, a €0.32 earnings beat, driven by 20% Y/Y revenue growth (revenue in line with consensus) and significantly wider gross margins (27.6% vs. 25.2%). In Q1, total subscribers were 615M (+19% Y/Y), with premium subs at 239M (+14%) and lower priced ad-supported subs at 388M (+22%). By geography, Europe was 38% of total subscribers, North America (27%), Latin America (22%), and rest of world (13%), with strong growth in family and duo plans. On a sequential basis, SPOT's Q2 guidance is 631M subscribers (+2.6%), premium subs at 285M (+19%), gross margins at 28.1% (+50 bps), and €250M operating income. Audio books and podcasts are added sources of growth. Spotify AUX is an in-house advisory agency for brands seeking to use music to enrich their ad campaigns."

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