Stock Market News

Redburn cuts WMG, Spotify stock ratings to Sell; shares down

2024.07.10 09:01

Redburn cuts WMG, Spotify stock ratings to Sell; shares down

Redburn Atlantic has downgraded Warner Music Group (WMG) and Spotify (NYSE:) shares to Sell, citing structural challenges and valuation concerns.

For WMG, Redburn highlights the discrepancies between their streaming growth projections and consensus forecasts.

Despite factoring in announced cost savings, their adjusted OIBDA (Operating Income Before Depreciation and Amortization) forecasts for WMG remain below consensus for FY24-26. The firm’s price for the stock of $23, implying a 25% downside from the current share price.

Redburn says it sees both Universal Music Group (UMG) and WMG “as structurally challenged,” and maintains a relative preference for the latter due to its strategic realignment and valuation gap compared to UMG.

Analysts said UMG’s recent stock performance appears correlated with its streaming revenue growth, which Redburn expects to disappoint. They reiterated a Sell rating for the stock with a price target of €15, 46% below the current price.

Spotify, on the other hand, is facing significant valuation risks, per Redburn’s note.

Analysts attribute the rich valuation of SPOT to ambitious long-term revenue growth estimates and its correlation with other risky assets like Bitcoin. The recent launch of Spotify’s audiobook bundle has helped it break away from the price-competitive music-only market, but legal challenges from music publishing organizations pose a significant risk.

“The litigation not only risks higher legal costs but could also challenge the royalty savings embedded in our estimates, derailing the cadence of future pricing changes,” analysts said.

They also point out that Spotify’s subscriber growth and average revenue per user could be pressured by the saturated developed markets and higher prices.

WMG and SPOT shares fell 3.2% and 1.6% in premarket trading, respectively.



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 96,010.72 0.44%
ethereum
Ethereum (ETH) $ 2,625.97 0.30%
tether
Tether (USDT) $ 1.00 0.01%
xrp
XRP (XRP) $ 2.40 0.83%
solana
Solana (SOL) $ 198.61 0.45%
bnb
BNB (BNB) $ 614.33 1.66%
usd-coin
USDC (USDC) $ 1.00 0.00%
dogecoin
Dogecoin (DOGE) $ 0.249743 0.67%
staked-ether
Lido Staked Ether (STETH) $ 2,625.97 0.17%
cardano
Cardano (ADA) $ 0.676067 3.37%
tron
TRON (TRX) $ 0.234769 1.30%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 95,918.70 0.50%
chainlink
Chainlink (LINK) $ 18.39 0.81%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,137.64 0.04%
avalanche-2
Avalanche (AVAX) $ 24.73 1.10%
stellar
Stellar (XLM) $ 0.313934 5.04%
the-open-network
Toncoin (TON) $ 3.80 1.49%
sui
Sui (SUI) $ 3.01 0.35%
shiba-inu
Shiba Inu (SHIB) $ 0.000016 2.07%
leo-token
LEO Token (LEO) $ 9.90 1.23%
hedera-hashgraph
Hedera (HBAR) $ 0.229429 1.61%
usds
USDS (USDS) $ 1.00 0.33%
litecoin
Litecoin (LTC) $ 105.86 0.91%
hyperliquid
Hyperliquid (HYPE) $ 22.70 4.40%
bitget-token
Bitget Token (BGB) $ 6.34 1.01%
weth
WETH (WETH) $ 2,629.16 0.16%
polkadot
Polkadot (DOT) $ 4.72 0.79%
bitcoin-cash
Bitcoin Cash (BCH) $ 324.33 0.55%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.10%
mantra-dao
MANTRA (OM) $ 5.78 0.78%
uniswap
Uniswap (UNI) $ 9.04 0.54%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,784.51 0.22%
ondo-finance
Ondo (ONDO) $ 1.31 2.44%
monero
Monero (XMR) $ 221.86 2.61%
pepe
Pepe (PEPE) $ 0.000009 2.93%
whitebit
WhiteBIT Coin (WBT) $ 27.20 0.17%
near
NEAR Protocol (NEAR) $ 3.17 1.90%
aave
Aave (AAVE) $ 240.14 0.73%
dai
Dai (DAI) $ 0.999768 0.06%
mantle
Mantle (MNT) $ 1.01 3.12%
aptos
Aptos (APT) $ 5.83 0.11%
internet-computer
Internet Computer (ICP) $ 6.86 1.09%
official-trump
Official Trump (TRUMP) $ 16.03 6.78%
susds
sUSDS (SUSDS) $ 1.03 0.20%
ethereum-classic
Ethereum Classic (ETC) $ 20.03 0.31%
bittensor
Bittensor (TAO) $ 357.82 3.85%
okb
OKB (OKB) $ 47.20 1.11%
gatechain-token
Gate (GT) $ 21.10 0.46%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.303375 1.56%
vechain
VeChain (VET) $ 0.031731 3.49%