Despite Recent Surge, Four Analysts Lower Their Spotify Price Targets

In the past few months, Spotify has experienced a bumpy ride on Wall Street.

Ahead of the New Year, the company’s stock experienced a near 50% plunge.  Just a few months earlier, the stock nearly broke the $200 mark in a dizzying surge.

By late December, the company remained literally points away from reaching the sub $100 mark.

According to one analyst in Wall Street, potential investors shouldn’t fear.  Spotify has already scraped bottom.  In a recently-issued opinion, MKM Partners analyst Rob Sanderson doubled-down on his ‘Buy’ rating.

Sanderson wrote,

We continue to see the music industry as highly investable and view SPOT as the platform positioned to create the most value for the music ecosystem, and its own investors, over the next decade.

He issued a hefty price target of $200.

Following Sanderson’s report, the stock appeared to finally rebound.  The company’s stock reached $113.74 the same day.  The company finished trading today closing at $117.48.

Yet, not everyone shares Sanderson’s optimism.

In fact, four major analysts have now cut Spotify’s stock price targets.

“We see Spotify shares as close to fairly valued.”

On Monday, Guggenheim’s Michael Morris downgraded the company’s stock from Buy to Neutral.  He had previously set a price target of $190.  That target now stands at $120, far below Factset’s average of $178.

Morris wrote,

Given high expectations, greater investor concern toward long-term valuation stories, and near-term concerns, we see Spotify shares as close to fairly valued.”

In the past 3 months, the company’s stock has plummeted 27%.

Stifel’s John Egbert reiterated his Buy stance on Spotify shares.  He slashed the price target, however, from $210 to $170.

We remain bullish on Spotify’s subscriber growth prospects and believe the company could deliver upside to our 2019 subscriber addition forecast of 24 million, particularly if newly (and soon-to-be) launched markets become material.

Deutsche Bank’s Lloyd Walmsley reiterated his Hold rating.  As with Egbert and Morris, he slashed the company’s price target to $135.  That’s $27 down from $152.

Nomura Instinet’s Mark Kelley wrote that the company was “among the most oversold stocks in our coverage.”  Maintaining a Buy rating on Spotify, he trimmed the price target from $190 to $188.  Kelley also slightly trimmed his estimated 2019 and 2020 revenue and earnings for the company.

Even if you don’t love the business model, we think Spotify has been significantly de-risked at current levels.

Most analysts, however, remain bullish on the company’s stock.  16 out of 22 analysts at major firms have maintained “Buy” or “Strong Buy” ratings.