Spotify Technology S.A. stock rose early Wednesday after the audio streaming platform posted quarterly earnings and gave an upbeat outlook for subscriber and user growth.
Spotify shares rose 8% in premarket trading Wednesday. The stock has more than doubled in value so far this year.
But one analyst downgraded the stock. PhillipCapital analyst Jonathan Woo changed his recommendation from Buy to Accumulate, indicating that perhaps investors should go a little easy on the Spotify, which is up 141% over the past 12 months.
An Accumulate rating is still a form of a buy recommendation. Woo cited the recent price gains as a reason for the downgrade and still increased his price target by 15% to $485.
Other analysts followed suit increasing their price targets after the earnings report. Evercore hiked its price target by 9% to $500, KeyBanc by 6% to $520, and Benchmark by 18% to $520.
Third-quarter earnings came in at 1.45 euros ($1.54) a share on revenue of 4 billion euros. While that was lower than the 1.69 euros a share on revenue of 4.03 billion euros predicted by analysts polled by FactSet, the strong fourth-quarter outlook appeared to make up for it.
Monthly active users (MAU) in the quarter were 640 million and premium subscribers amounted to 252 million, up by double-digits from last year and above the company's own guidance.
Spotify has forecast fourth-quarter profit above Wall Street estimates, and now sees total MAU at 665 million and premium subscribers climbing to 260 million.
