Price Target Adjustment#
BofA Securities has lowered its price target for Spotify Technology SA (NYSE:SPOT) from $750 to $685, while still maintaining a Buy rating on the stock. Currently, Spotify shares are trading at $432, which is close to their 52-week low of $405 and significantly down from a high of $785.
Reasons for the Change#
Analyst Jessica Reif Ehrlich made this adjustment to reflect a lower forecast for free cash flow for the year 2027. The new price target implies a valuation of about 29 times the revised cash flow estimate, which remains unchanged from previous calculations. BofA believes that long-term profit growth and cash flow generation will come from deeper subscriber engagement, potential price increases, and new pricing tiers.
Future Growth Potential#
The firm also anticipates improvements in advertising revenue in the second half of 2026, driven by digital initiatives and new business ventures. Notably, Spotify has yet to fully tap into the audiobooks market, particularly among the large Spanish-speaking audience, which could provide additional growth opportunities.
Recent Earnings Performance#
In its first-quarter earnings report for 2026, Spotify exceeded expectations with earnings per share (EPS) of $3.45, surpassing the forecast of $2.95. The company's revenue also outperformed projections, reaching $4.53 billion compared to the expected $4.52 billion. Despite these positive results, Spotify's stock experienced a decline in premarket trading. Additionally, Raymond James has lowered its price target on Spotify to $555 from $605, citing increased investment spending as a reason for this adjustment. These developments reflect ongoing evaluations of Spotify's financial performance and market position.