Buy Rating on Warner Music Group: Strong Long-Term Outlook Despite Streaming Underperformance

Goldman Sachs analyst Stephen Laszczyk has maintained their bullish stance on WMG stock, giving a Buy rating today.

Stephen Laszczyk has given his Buy rating due to a combination of factors influencing the Warner Music Group’s prospects. Despite a modest underperformance in the Recorded Music Streaming Revenue for FY2Q24, the long-term outlook for the company remains positive. Laszczyk’s analysis suggests that Warner Music Group is well-positioned to maintain double-digit streaming revenue growth, achieve continued margin expansion, and generate robust free cash flow. These elements suggest a stable and promising future for the company, underpinning the rationale for the Buy rating.

Moreover, Laszczyk finds the current valuation of Warner Music Group’s stock to be appealing, with the company trading at growth-adjusted multiples that are attractive relative to its scale and global presence. The company’s leading platform for artist discovery and development is poised to capitalize on secular industry tailwinds such as the ongoing rise in streaming and emerging licensing opportunities tied to new technologies. Even with a slight revision in the revenue and OIBDA outlook based on recent results and management commentary, the projected 25% upside to the 12-month price target supports the continued endorsement of WMG as a Buy.

In another report released today, Morgan Stanley also assigned a Buy rating to the stock with a $41.00 price target.

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Warner Music Group (WMG) Company Description:

With about $3.5 billion in revenue, Warner Music Group is one of the largest music companies in the world. More than 80% of Warner’s revenue comes from recorded music, while the remainder is generated from music publishing.