(CercleFinance.com) – BofA Securities reiterated its buy recommendation on Spotify on Thursday, while raising its price target on the stock from $137 to $164 following the last investor day organized by the music streaming giant.
In a research note, the intermediary argues that the Swedish group is currently in the process of transforming itself into a generalist audio platform, offering a multitude of podcasts as well as audiobooks, with other development opportunities still to be explored.
All these avenues should enable the company to grow from an estimated total market of $33 billion to a potential universe of some $350 billion, a more than tenfold increase, he continues.
At the same time, the strengthening of its offer should allow it to reduce the churn rate, improve customer loyalty and increase the average revenue per subscriber (ARPU) over time, adds the analyst.
Until then, the rise in podcasting should support higher profit margins through increased advertising revenue, notes BofA.
Taking note of the optimism shown by Spotify, the intermediary raises its forecasts for turnover and gross margin for the group by 2025.
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