Bernstein Initiates Coverage of Spotify, Starts at 'Underperform'

Bernstein Initiates Coverage  Spotify, Starts at 'Underperform'

Bernstein Bank has begun covering Spotify as a stock, and they are very bearish at the moment, believing that the stock is significantly underperforming.

Todd Juenger, who is an analyst at Bernstein, has set a target price $127. This means that he believes that the stock will eventually fall about 20% from its current price.

So far, there has been no public indication as to why Juenger is so bearish on the stock.

Though, according to Seeking Alpha, Juenger’s view Spotify is a distinctly minority opinion. Of the 31 analysts currently covering the company, a majority 18 have either a bullish or very bullish view the stock. Another 10 analysts have a neutral outlook on the stock while only 3 analysts have a bearish or very bearish outlook.

What’s more, the average target price for all analysts the stock is currently $168.39, which is significantly higher than the stock’s current price $151.86.

At roughly the same time that Juenger issued his underperform rating Spotify, Nomura Securities issued a buy rating on the stock. They also set a target price $180.

Back in September, there were decidedly mixed reports about the stock. While Rosenblatt Securities gave it a buy rating and a target price $184, Wells Fargo & Co gave it an underperform rating with a target price $115.

A month later, two more analysts gave bullish reports. The UBS Group gave the stock a buy rating with a target price $185, which was up from their previous target price $182, and Canaccord Genuity also issued a buy rating while raising their target price from $170 to $175.

At the end that month, Spotify reported its third-quarter financials. This included revenue $1.73 billion, which was slightly higher than the analysts’ estimate $1.72 billion. The company also overperformed when it came to earnings per share (EPS). They recorded an EPS $0.36, which was ahead estimates by $0.76.

The company also 113 million paying subscribers.