Shares of the Luxembourg company at last check were up 2% to $261.95.
Analyst Jeffrey Wlodarczak, who affirmed his price target at $340 a share, said in a research note that he was optimistic about the company's long-term prospects.
On Wednesday, Spotify shares fell after the company reported first-quarter earnings and cut its 2021 estimate for monthly active users to a range of 402 million to 422 million from 407 million to 427 million.
Revenue for the quarter rose 16% to 2.15 billion euros ($2.6 billion) and matched the analyst consensus, but the company also reported a wider loss per share.
The shares have underperformed year to date and the first-quarter results were mostly in line, the analyst said.
Wlodarczak said that there is still "sizable" subscriber growth left in audio streaming globally and Spotify is "clearly best in class."
The company is demonstrating it has pricing power and "significant room" to lever its nearly 400 million active users and 185 million paying subscribers to increase user monetization, he said.
TheStreet.com Founder Jim Cramer said that Spotify has "always been a good stock to own when it's down bad."
Last week, Jefferies began coverage of Spotify with a buy rating and $360 price target.
Spotify has increased users during the pandemic lockdown but still faces intense competition.