Evercore ISI Maintains Positive Outlook on Spotify Stock with $650 Target

Evercore ISI's Rating on Spotify#

Evercore ISI has reiterated its Outperform rating on Spotify's stock (NYSE:SPOT) and set a price target of $650. This target suggests that analysts believe there is significant potential for the stock to increase in value. However, data indicates that Spotify's stock may currently be overvalued compared to its estimated fair value.

Earnings Expectations#

With Spotify's earnings report scheduled for April 28, analysts expect a modest performance. Evercore ISI considers the revenue estimate of €4.52 billion for the first quarter to be somewhat ambitious but achievable, especially following recent price increases in over 150 markets, including the U.S. in January.

The expected operating income of €672 million is seen as attainable due to historical trends and current gross margin improvements. This operating income would represent a margin of 14.9%, reflecting a 250 basis point increase from the previous year.

Subscriber Growth and Market Trends#

Analysts predict a gross margin of 32.9% and 294 million paid subscribers for Spotify, with expectations of 3 million new subscriber additions this quarter. This is a decrease from previous quarters, where the company added 5 million and 3 million subscribers, respectively. Notably, five analysts have recently raised their earnings forecasts, which adds confidence to the positive outlook for Spotify.

Broader Market Context#

Spotify is also preparing for its first-quarter earnings report, with a focus on the effects of its January price hikes in the U.S. Other firms have issued varying ratings and price targets for Spotify, with Benchmark setting a target of $760 and Guggenheim at $600. However, some analysts, like IndeRes, have downgraded their ratings due to concerns about the stock's recent price rally.

Additionally, Spotify is facing scrutiny from Texas Attorney General Ken Paxton, who has launched an investigation into alleged payola schemes involving streaming platforms. Despite these challenges, many analysts remain optimistic about Spotify's growth potential, particularly in the latter half of 2026.