KeyBanc has lowered its price target for Spotify to $720.00 from $830.00 while retaining an Overweight rating on the stock, citing foreign exchange headwinds that weaken the companys near-term financial outlook. The change follows a pullback in the share price - Spotify is trading at $420.04 after sliding nearly 17% over the past week and trading close to a 52-week low of $405.
Analyst Justin Patterson at KeyBanc said currency effects are the primary reason for trimming revenue and free cash flow estimates for 2026 and 2027. Despite the downward revision to the target, the firm continues to view Spotify favorably on several fundamental measures.
KeyBanc highlighted that Spotifys implied valuation of 15.3x 2027E EV/FCF looks elevated relative to the companys underlying fundamentals, suggesting room for upside if execution aligns with expectations. Data cited from InvestingPro showed Spotify is slightly under its Fair Value assessment, with a reported trailing P/E of 53.2 and a PEG ratio of 0.56.
The research note emphasized two operational strengths that KeyBanc expects to support the business: intact pricing power and the adoption of artificial intelligence. The firm said AI has accelerated product development velocity and is generating operational efficiencies across the streaming platform.
Even after the recent revisions prompted by FX pressures, KeyBancs operating profit estimates remain above consensus levels - running about 1% higher than Street estimates for 2026 and roughly 5% higher for 2027.
Separately, Spotify announced an expansion into the physical book market through a partnership with Bookshop.org. Under that agreement, premium subscribers in the U.S. and U.K. will be able to buy hardcover and paperback books directly through the Spotify app starting this spring, marking a move beyond the companys existing audiobook offerings.
Investor attention is also focused on broker reactions ahead of Spotifys forthcoming earnings report. Jefferies reaffirmed its Buy rating, citing optimism on fourth-quarter results and noting what it viewed as conservative gross margin expectations for Q4. Goldman Sachs upgraded Spotify from Neutral to Buy and set a price target of $700. UBS reiterated a Buy rating as Spotify disclosed planned U.S. Premium subscription price increases across Individual, Duo, Family, and Student plans. Benchmark kept a Buy rating but trimmed its price target to $760, pointing to expectations for operational leverage and the impact of incremental pricing on 2026 results.
Taken together, analyst notes and corporate moves paint a picture of mixed near-term headwinds and strategic expansion. Currency-related pressures have forced revisions to revenue and cash flow forecasts, yet several brokerage houses continue to highlight long-term growth levers including pricing actions, operational efficiencies, and product diversification.
For investors evaluating Spotify, the coming quarters will likely hinge on how material FX effects prove to be for reported results, the pace at which AI-driven efficiencies translate into margins, and the commercial reception to new monetization initiatives such as book sales and recent subscription price increases.