BofA Securities cut its price target on Spotify (NYSE:SPOT) to $750.00 from $900.00 but held to a Buy recommendation following the company’s most recent quarterly disclosure. Spotify shares were trading at $500.07 at the time of the update. InvestingPro data cited a PEG ratio of 0.62 for the company, indicating a low price-to-earnings valuation relative to near-term earnings growth, while its trailing P/E sits at 60.03.
The price-target revision from BofA came in the wake of Spotify’s fourth-quarter report. BofA characterized the quarter as solid, noting that monthly active user figures and gross margins outperformed internal forecasts and that revenue modestly exceeded expectations.
Spotify posted fourth-quarter revenue of €4,531 million, a 7% increase year-over-year and 13% growth when excluding foreign-exchange effects. That top-line number was slightly above BofA’s estimate of €4,519 million. Gross profit rose 10% year-over-year to €1,499 million, also edging past the firm’s projection of €1,487 million. Over the trailing twelve months, the company’s revenue growth averaged 11.89%.
Breaking down the revenue mix, premium subscriptions produced €4,013 million, essentially matching estimates of €4,008 million. Ad-supported revenue exceeded expectations at €518 million versus a €511 million estimate. Reported gross margin reached 33.1%, ahead of BofA’s forecast of 32.9% and modestly above the company’s trailing twelve-month gross margin of 31.85%.
BofA relayed management’s view that gross margins should improve in 2026, and highlighted company commentary that planned price increases should enable revenue growth to outpace content cost inflation. Spotify reported diluted earnings per share of $7.85 for the period, and analysts cited in InvestingPro continue to project ongoing profitability.
Additional coverage from other sell-side firms has been active since the fourth-quarter results. The company reported its biggest-ever quarterly increase in monthly active users, adding 38 million new accounts, which was cited by Guggenheim as contributing to a broad-based beat. IndeRes upgraded the stock to Buy, pointing to operational execution and profitability above its expectations. MoffettNathanson raised its price target to $514 and acknowledged improvements in gross margin even as label contract renewals approach.
Morgan Stanley held an Overweight rating while trimming its price target to $650 and listing Spotify as a Top Pick. Citizens reiterated a Market Outperform stance with a $800 target, emphasizing structural advantages and scale of the audience. Guggenheim moved its target to $720, continuing to rate the shares Buy while observing a higher cost of capital.
Taken together, the analyst moves reflect a market recalibration of Spotify’s valuation and margin trajectory. Several firms maintained bullish stances despite adjusting targets, reflecting the interplay of margin improvement expectations, subscription pricing, and content cost dynamics in assessing the company’s medium-term economics.
Sector impact: These developments are relevant to digital media, streaming services and advertising markets, as changes in margins and user growth affect competitive positioning and advertiser economics.