Goldman Sachs adjusted its valuation for Warner Music Group (NASDAQ:WMG) upward to $33.00 from $32.00 while retaining a Neutral rating after the company's fiscal first-quarter 2026 results. The new target sits near InvestingPro's Fair Value assessment, which indicates that at a market price of $28.19 the stock may be slightly undervalued. Analyst price targets for WMG across the market currently span a broad range - from $30 at the low end to $46 at the high end.
The investment bank raised its forward expectations for Warner Music's fiscal 2026 profile and beyond. Goldman now models roughly 2% higher revenue, about 3% higher Adjusted OIBDA (Operating Income Before Depreciation and Amortization), and approximately 2% higher free cash flow compared with its prior outlook. These revisions follow what Goldman described as a generally encouraging set of developments in the quarter and in company guidance.
Warner's trailing-twelve-month revenue has climbed 8.46% to $6.88 billion, and EBITDA stands at $1.48 billion. Goldman cited multiple factors behind the more optimistic estimates: improved momentum in subscription and ad-supported streaming, the company's new 2026 guidance for revenue and Adjusted OIBDA, reaffirmed targets for margin expansion and operating cash flow conversion, and identified opportunities to apply artificial intelligence across the business.
Goldman's higher projections reflect several measurable drivers tied to the quarter. The firm pointed to Warner's fiscal first-quarter beat versus expectations, a stronger subscription streaming outlook underpinned by higher pricing and an expanding contribution from AI-related partnerships, and margin expansion tracking toward the higher end of the company's guidance amid ongoing cost efficiency efforts. Even with those upward revisions, Goldman elected to keep its Neutral stance on the shares.
Warner Music's reported fiscal first-quarter 2026 results showed a mixed set of outcomes. Total revenue came in at $1.84 billion, exceeding the consensus estimate of $1.77 billion by about 3.95%. Earnings per share for the quarter were $0.33, however, below the expected $0.36 by roughly 8.33%. This divergence - a revenue beat concurrent with an EPS shortfall - highlights an uneven near-term performance profile, where top-line strength was not fully reflected in per-share profitability.
The revenue upside is consistent with sales strength in Warner's core businesses, while the EPS miss points to higher costs or other financial pressures weighing on net results for the period. Analysts and market participants will be watching how the company converts revenue growth into operating leverage and free cash flow in subsequent quarters, especially given Goldman's upgraded modeling for margin expansion and cash conversion.
In sum, Goldman increased its price target modestly and improved fiscal-year assumptions on the back of streaming momentum, updated guidance and potential AI contributions, but it maintained a Neutral recommendation as the company works to translate revenue gains into per-share earnings improvements.