Bernstein analyst Todd Juenger has downgraded his rating on the stock of music streaming giant Spotify to 'underperform,' citing its roughly 70 percent run-up since a podcasting deal with Joe Rogan. But he raised his stock price target. Details:
Bernstein analyst Todd Juenger has downgraded his rating on the stock of music streaming giant Spotify from "market perform" to "underperform," citing its run-up since a big podcasting deal with Joe Rogan.
But he raised his stock price target from $134 to $172. The stock in pre-market trading on Monday was down slightly at $269, giving it a market capitalization of about $51 billion. its multiyear Rogan deal. The day before that, the shares had closed at $161.43. "The market has added about $20 billon of value to Spotify" since then, Juenger wrote in his Monday report. "We continue to believe it's unlikely Spotify will generate much earnings from podcasts.
The analyst acknowledged though that "we failed to previously appreciate" the logic that, if Spotify succeeds in securing exclusivity on popular podcasts, "it may naturally lead to increased share of paid music streaming, if consumers choose to consolidate their listening into one app." Added Juenger: "Ardent bulls would argue for additional positive follow-on impacts, believing this will propel Spotify to become increasingly dominant.
He concluded: "Our bull case ... still indicates a target price of $285, not much upside to current market." His base case scenario would get him to a $154 stock price, while his bear case would value the company at $71. Said Juenger: "A 10 percent/70 percent/20 percent weighted blend of our three cases yields our blended target price of $172, which is 37 percent downside to current market price."
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