IndeRes has elevated its recommendation on Spotify (NYSE: SPOT) from Accumulate to Buy and increased its price objective to $595.00 from $590.00 following the company’s fourth-quarter report, which the research firm said demonstrated operational delivery above its forecasts.
The streaming company, with a reported market capitalization of $98.1 billion and a share price at $476.02, recorded an 8.06% return over the past week, according to the figures cited. IndeRes pointed to Q4 profitability and user expansion as key drivers that outpaced its expectations, and it said first-quarter guidance likewise topped forecasts, with both EBIT and monthly active user trends stronger than anticipated.
Metrics from InvestingPro referenced in the research note show Spotify achieved 11.89% revenue growth over the last twelve months and earned an overall Financial Health designation of "GREAT." IndeRes emphasized management comments around the January U.S. price increase as constructive, noting that early churn trends have remained low and in line with historical levels even as Spotify now carries a $1-2 monthly premium versus key competitors.
The upgrade followed a post-earnings rally in Spotify shares, yet IndeRes observed that the stock still trades below levels that prevailed at the time of the research house’s prior update. With the firm raising its earnings estimates, the new target reflects what IndeRes views as a more compelling risk-adjusted valuation over a 12-month horizon.
IndeRes highlighted valuation metrics to support its stance. Spotify currently trades at a price-to-earnings ratio of 60.03, but the InvestingPro-derived price/earnings-to-growth (PEG) ratio of 0.62 suggests a relatively low P/E when measured against near-term earnings growth forecasts. IndeRes concluded that this combination points to meaningful upside potential on a risk-adjusted basis and underpins the change to a Buy rating. The firm’s view is consistent with the broader analyst consensus noted in InvestingPro data, which stands at 1.61 (Buy).
Separately, Spotify’s own fourth-quarter 2025 results drew attention with reported revenue of 4.53 billion, a 13% year-over-year increase excluding foreign exchange effects, alongside a record gross margin of 33.1%. For the first quarter of 2026, Spotify gave guidance that included anticipated revenue of 4.5 billion and operating income of 660 million.
In the wake of the results, several sell-side firms adjusted their price targets while largely retaining favorable stances. Goldman Sachs trimmed its target to $670 and kept a Buy rating. Evercore ISI lowered its target to $700 and maintained an Outperform rating. Jefferies moved its target to $650 and kept a Buy rating. Canaccord Genuity reduced its target to $750, attributing the change to foreign exchange headwinds but retained a Buy rating. By contrast, Monness, Crespi, Hardt reiterated a Neutral rating despite acknowledging that the company’s earnings beat expectations.
IndeRes’s upgrade reflects a combination of stronger-than-expected operating results, encouraging early outcomes from U.S. price changes, and revised earnings assumptions that make the current valuation appear more attractive to the firm. The research house’s raised estimates and the InvestingPro data on growth and financial health were cited as supporting evidence for the upgraded recommendation.
Key takeaways:
- IndeRes upgraded Spotify to Buy and raised its price target to $595 from $590 after Q4 results exceeded estimates.
- Spotify reported 4.53 billion in Q4 2025 revenue, 13% year-over-year growth excluding FX, and a record gross margin of 33.1%; Q1 2026 guidance includes 4.5 billion revenue and 660 million operating income.
- Valuation appears mixed - a high P/E of 60.03 but a low PEG of 0.62, and InvestingPro data shows 11.89% revenue growth over the last year and a Financial Health score of "GREAT."
Risks and uncertainties:
- Pricing sensitivity - the January U.S. price increase introduces risk if churn were to accelerate beyond the early trends, which could affect consumer-facing sectors and streaming competition.
- Valuation volatility - a high P/E ratio leaves the stock exposed to sentiment shifts if growth expectations change, impacting technology and media equity valuations.
- Foreign exchange headwinds - some firms cited FX as a reason for adjusting targets, which is an uncertainty for reported revenue and margins and can affect multinational earnings across sectors.
IndeRes’s revision to Buy represents its assessment of improved risk-adjusted upside over a 12-month period, but the range of responses from other brokers - from maintained Buy/Outperform ratings to a reiterated Neutral - highlights differing views on near-term drivers and valuation. The company’s reported margin expansion and guidance will remain focal points for investors watching user trends, pricing execution and currency effects.