At the same time, UBS analyst Eric Sheridan raised his share-price target for Spotify to $204 from $189, reflecting recent market activity.
While the company’s move into podcasting represents “a positive thematic narrative” for coming years, the stock “is now pricing in the entirety of upside optionality,” Sheridan wrote in a commentary cited by Bloomberg.
Spotify's stock has doubled in the last three months, jumping 45% in just the past month. Its trailing price-earnings ratio now stands at a high 52, and its price-cash flow ratio registers at 119, according to Morningstar.
There is little “pronounced upside that could expand the valuation multiple from current levels,” Sheridan said.
Last week, Spotify received a thumbs up from one Wall Street analyst and a thumbs down from another.
J.P. Morgan analyst Doug Anmuth raised his price target to $305 from $185 and kept his overweight rating on the company’s stock. He expects positive momentum from the company’s efforts to secure exclusive podcast content and beef up its premium offering.
But Bernstein analyst Todd Juenger downgraded Spotify to underperform from market perform, as he doesn’t see Spotify's move to bolster its podcast offerings generating as much earnings as others expect, given that some of the offerings "are only relevant in the U.S.”
He did raise his one-year price target to $172 from $134, however, though that still implies downside from Monday’s close of $261.19.
Spotify recently traded at $248.55, down 4.84%.