MoffettNathanson has raised its price target on Spotify to $514.00 from $487.00, while keeping a Neutral rating on the music-streaming company. The firm’s move follows Spotify’s recent quarterly disclosures and management commentary on margins; at the time of the note Spotify was trading at $476.02 with a market capitalization of $98.1 billion and a consensus analyst recommendation of Buy.
The research house highlighted Spotify’s capacity to widen gross margins even with label renewals scheduled for 2026. Management guided to a total gross margin for the first quarter of 2026 of 32.8%, which MoffettNathanson noted represents a 130 basis point improvement year-over-year. The firm said it revised its 2026 gross margin assumptions in light of that commentary.
Clay Griffin, the MoffettNathanson analyst, conceded he had been incorrect in expecting material margin pressure. Spotify’s reported Premium Gross Profit Margin was 34.8% in the fourth quarter of 2025, up slightly from 34.7% in the fourth quarter of 2024, a trend Griffin flagged as evidence of resilience in the company’s margin profile.
Alongside the margin revisions, MoffettNathanson reiterated confidence in Spotify’s pricing power across key markets. Despite these positive margin signals, the firm maintained its Neutral stance primarily because of two concerns it emphasized: the ability of Spotify to scale its advertising business and the possibility of AI-native competitors entering the market.
Third-party valuation metrics cited in the note reflect a mixed picture. According to InvestingPro analysis referenced in the reporting, Spotify was trading at a relatively high price-to-earnings ratio of 60.03 but had a favorable price/earnings-to-growth (PEG) ratio of 0.62, which suggests a low P/E relative to near-term earnings growth expectations. InvestingPro additionally assigned Spotify a financial health score of "GREAT" and flagged supplemental research resources available on the company.
Analyst reactions to Spotify’s fourth-quarter results have been varied. IndeRes upgraded its rating from Accumulate to Buy, attributing the change to stronger operational execution and profitability that beat expectations and to encouraging first-quarter guidance. Goldman Sachs retained a Buy rating but trimmed its price target to $670 from $700, reflecting revised operating assumptions.
Monness, Crespi, Hardt maintained a Neutral rating, while acknowledging the company’s better-than-expected Q4 performance and a reasonable first-quarter outlook that included anticipated revenue of c4.5 billion and operating income of c660 million. Evercore ISI adjusted its price target to $700 from $750 and kept an Outperform rating, citing 13% year-over-year revenue growth and a record-high gross margin of 33.1%.
Jefferies lowered its price target to $650 from $750 but retained a Buy rating, pointing to the 32.8% first-quarter gross margin guidance as a constructive datapoint. Taken together, these updates illustrate a range of analyst perspectives grounded in Spotify’s recent financial results and forward-looking margin commentary.
Contextual takeaways
- Margin trajectory has become a focal point for analysts after Spotify reported improving premium margins and issued stronger gross margin guidance for early 2026.
- Brokerages diverge on valuation and outlook - some raised targets or ratings while others trimmed price objectives but left positive ratings in place.
- Key market questions remain concentrated on advertising monetization and competitive threats from potential AI-native entrants.