Spotify Technology has held up well during the recent market downturn. And on Tuesday a Wall Street analyst raised his price target on Spotify stock, citing a positive outlook for the streaming music leader.
Guggenheim Securities analyst Michael Morris reiterated his buy rating and "best idea" designation on Spotify stock. He upped his price target to 520 from 500.
On the stock market today, Spotify stock rose 1.1% to close at 463.59.
Spotify stock has formed a flat base with a buy point of 506.47, according to IBD MarketSurge charts. In a bullish sign, Spotify has found support recently above its 50-day moving average line.
Morris said he is increasingly bullish on Spotify's prospects ahead of the company's fourth-quarter earnings report on Feb. 4.
"Fourth-quarter results should provide an update on the 'disciplined … ambition to seize opportunities' that CEO Daniel Ek teed up with Q3 earnings," Morris said.
The Q4 report should benefit from Spotify's premium bundled service offering on both revenue and gross profit margins, he said.
"Our investor conversations have largely focused on gross margin trends in 2025, where we forecast another year of expansion (+200 basis points to 32%) albeit at a slower rate than the record 2024 pace, which was fueled by the bundle and a reduction in exclusive podcast content spend," Morris said.
Also, analysis of app download data from Apptopia supports the targets that Spotify gave for premium subscribers and monthly active users, Morris said.
Spotify stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
