Evercore ISI reduced its price target for Spotify (NYSE:SPOT) to $700 from $750 but retained an Outperform rating in the wake of the company’s fourth-quarter report. The revised target remains substantially higher than Spotify’s market price of $478 and reflects continued analyst confidence in the streaming platform despite the haircut to the target.
Spotify delivered fourth-quarter revenue of €4.53 billion, which represented 13% year-over-year growth after stripping out foreign exchange effects and surpassed analysts’ expectations. That result is consistent with Spotify’s trailing-twelve-month revenue expansion of 11.89%.
Profitability metrics were also notable. Gross margin reached a record 33.1%, up 90 basis points versus the prior year and exceeding the company’s trailing twelve-month gross profit margin of 31.85%. Operating profit for the period totaled €701 million, and operating margin hit a record 15.5% - a 430 basis-point improvement year-over-year.
User metrics outperformed consensus as well. Spotify recorded 38 million net additions in monthly active users during the quarter, bringing the total to 751 million users - a figure that topped estimates from Evercore ISI and Street expectations.
Analysis from InvestingPro indicates that Spotify is profitable on a trailing-twelve-month basis and is generating strong cash flows that are sufficient to meet interest obligations. The company’s balance sheet also showed strength: InvestingPro’s assessment finds more cash than debt and a current ratio of 1.61. Evercore additionally pointed to record share buyback activity during the quarter as a demonstration of financial flexibility.
In its commentary, Evercore ISI said Spotify’s underlying business improved with accelerating revenue growth and expanding margins, trends the firm expects to persist into the first quarter in line with company guidance. The firm characterized the quarterly results as "fundamentally and relatively very good" and used those results to justify the roughly 15% lift in the share price following the earnings release.
Despite Evercore’s lowered target, market behavior has shown recent volatility. InvestingPro data cited in the note indicated the stock fell 12.48% over the past week. At the same time, valuation metrics such as a PEG ratio of 0.62 point to a potential alignment of price and growth expectations, while the company trades at a P/E ratio of 60.29.
Other broker responses to the quarter were mixed but broadly positive. Jefferies kept a Buy rating on Spotify but reduced its price target to $650, highlighting the company’s first-quarter gross margin guidance of 32.8%, which the firm noted is above consensus. Canaccord Genuity likewise maintained a Buy rating and set a new price target of $750, citing foreign exchange headwinds as a factor and underscoring the record addition of 38 million monthly active users.
Raymond James lowered its price objective to $620 while keeping an Outperform rating, pointing to first-quarter 2026 guidance that exceeded expectations, particularly on gross margins. These adjustments underscore a generally favorable analyst stance, even as firms recalibrate price targets to reflect guidance details and currency impacts.
Taken together, the quarter presented stronger-than-expected top-line performance, margin expansion and robust user growth, alongside active capital return via buybacks and a balance sheet showing more cash than debt. While analysts trimmed certain targets, their maintained Buy/Outperform stances signal ongoing confidence in Spotify’s near-term trajectory.
Contextual note - The company reported fourth-quarter earnings per share of €4.43, ahead of the €2.85 forecast. Revenue was reported at €4.5 billion in another line item, slightly above the €4.52 billion estimate.