Loop Capital updates Spotify stock coverage amid price increases, raises PT by $85

On Monday, Loop Capital made an adjustment to the price target of Spotify (NYSE:SPOT) Technology S.A. (NYSE:SPOT), increasing it significantly to $250 from the previous target of $165. Despite the substantial increase, the firm has decided to maintain a Hold rating on the shares of the audio streaming platform.

The revision of the price target comes as Loop Capital updates its model for Spotify, taking into account the company's recent and planned price hikes in certain markets, including a second increase within a year in the United States. The analyst believes these changes will positively impact the company's revenue streams.

Additionally, Spotify's recent venture into the audiobook market, which started in the U.S. in September, has been deemed quite successful by the analyst. This new business line is expected to contribute to the company's growth and is a factor in Loop Capital's updated financial estimates.

Despite the positive developments and raised estimates, Loop Capital continues to hold a cautious stance on Spotify's stock valuation. The Hold rating suggests that the firm advises investors to maintain their positions without further buying or selling shares at this time.

Investors and market watchers will likely monitor Spotify's performance closely, considering the company's strategic pricing adjustments and expansion into new content areas like audiobooks. The increased price target reflects a more optimistic outlook on the company's ability to grow revenue and profit in the near future.

As Spotify (NYSE:SPOT) navigates through strategic pricing adjustments and content expansion, Loop Capital's updated price target reflects a blend of caution and recognition of the company's potential for revenue growth. To further understand Spotify's financial health and market position, we turn to real-time data and insights from InvestingPro. With a market capitalization of $54.7 billion, Spotify's growth narrative is further supported by a 12.96% increase in revenue over the last twelve months as of Q1 2023. Additionally, the company's gross profit margin stands at 26.03%, indicating its ability to retain a significant portion of sales as gross profit.

InvestingPro Tips highlight that Spotify holds more cash than debt, suggesting a strong balance sheet, and that net income is expected to grow this year. These insights align with the audio streaming giant's recent price hikes and successful audiobook market entry, which could bolster profitability. Furthermore, with analysts predicting the company will be profitable this year, there's an optimistic undertone to Spotify's financial trajectory.

For those looking to delve deeper into Spotify's performance and future outlook, InvestingPro offers additional tips, with a total of 14 available for the company. These include observations on stock price volatility, trading multiples, and liquidity ratios, which are valuable for investors considering the Hold rating from Loop Capital. To access these insights and more, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing their investment research with comprehensive data and expert analysis.

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