Spotify (NYSE:SPOT) shares rose on Monday after investment firm Raymond James upgraded the streaming company, noting that much of the bad news the company has seen recently is "priced in" to the stock.
Analyst Andrew Marok moved the rating on Spotify (SPOT) shares to outperform from market perform and attached a per-share price target of $150, noting that despite the "soft margin guidance," and a "slower than expected scaling" of its podcast business, the company is still a "best-in-class" platform and has the potential for further subscriber gains and low churn.
There are also other potential catalysts for the stock, including its upcoming investor day.
"Spotify remains the market leader in streaming music with key competitive advantages including a global presence, best-in-class user experience, and differentiated podcasting content," Marok wrote in a note to clients.
Marok added the firm's "improved outlook" on Spotify (SPOT) comes despite considerable challenges, including record labels' negotiation power and investor caution on podcasting.
Spotify (SPOT) shares rose nearly 5% to $117.50 in premarket trading on Monday.
In addition, Marok noted that Spotify (SPOT) may have been hit by some "collateral damage" from Netflix's (NFLX) issues, but Spotify is not in as competitive of a market as Netflix, which the analyst said "ignores key differences" between the two companies.
Last month, investment firm Wells Fargo noted that the sentiment on Spotify (SPOT) heading into its investor day later this month can't "get any worse."
Analysts have been overly bullish on Spotify's stock (SPOT). It had an average rating of BUY from Wall Street analysts, while Seeking Alpha authors rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rated SPOT a SELL.