Spotify Technology stock scored a price-target hike on Tuesday from an analyst who thinks the music streamer has "underappreciated pricing power."
Bernstein analyst Ian Moore reiterated his outperform rating on Spotify stock and raised his price target to 840 from 825.
On the stock market today, Spotify fell 2% to close at 721.39. On June 27, Spotify hit a record high of 785.
"Spotify has multiple attractive avenues to drive sustained topline growth and operating leverage," Moore said in a client note. "Ten years of pent-up pricing power combined with minimal churn on recent price hikes continue to give us confidence in Spotify's ability to compound ARPU (average revenue per user) in the high single digits."
Further, Spotify is benefiting from the performance of high-margin, non-music content such as podcasts and audiobooks, he said.
Plus, Spotify is widely expected to launch a higher-priced, "superfan" streaming tier, Moore said.
"The highly anticipated superfan tier, targeted at power users and likely to bundle exclusive features like early ticket access and potentially AI tools, represents a meaningful gross profit unlock," Moore said. He expects it to launch in early 2026.
Spotify stock is on the IBD Tech Leaders list.
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