Jefferies has confirmed a Buy rating on Spotify (NYSE: SPOT) and held its price target at $750.00 as the music-streaming company approaches its next earnings report. The firm described fourth-quarter gross margin forecasts as appearing conservative, while noting that first-quarter gross margin expectations seem to have been effectively accounted for.
According to Jefferies, revenue momentum should pick up over the next several quarters as a result of subscription price increases implemented in the United States. The analyst team expects management to continue discussing forward-looking gross margins that will generally expand over time but may fluctuate from quarter to quarter.
Jefferies does not anticipate upside surprises in subscriber additions for either the fourth quarter or the first quarter, citing the company’s recent pricing moves as a limiting factor on near-term subscriber growth. The firm singled out the imminent earnings report as a possible "clearing event" - a moment that could reassure investors - if first-quarter guidance demonstrates that Spotify can preserve its gross margin path while preparing for planned wholesale Premium Subscriber Margin increases slated for 2026.
Separately, Spotify has announced higher U.S. Premium subscription prices that will take effect in February. The Individual plan will increase by $1 to $12.99 per month. Duo and Family plans will each rise by $2, to $18.99 and $21.99 per month, respectively.
The price adjustments have been followed by analyst activity across the street. Goldman Sachs upgraded Spotify to a Buy rating and assigned a $700 price target. UBS reiterated a Buy rating and maintained an $800 price target. Benchmark raised its price target to $760 while keeping a Buy rating, citing expectations for operational leverage in 2026. Deutsche Bank preserved its $775 price target and reiterated a Buy rating.
Those analyst moves reflect a mix of strategic pricing changes by Spotify and mostly positive outlooks from analysts regarding the company’s prospects. Jefferies’ note emphasizes margin dynamics and the potential for the upcoming quarterly update to clarify whether Spotify’s margin trajectory can be sustained through future margin-improvement plans.
Summary
Jefferies holds a Buy rating and $750.00 price target on Spotify, sees revenue benefit from U.S. price hikes, expects expanding but variable gross margins, and does not foresee near-term subscriber growth surprises. Other major banks have also issued Buy ratings and set varying price targets following Spotify's price increases.