BofA raised the price target for Spotify (NYSE:SPOT) to $185 from $165 in a note to clients Thursday, reiterating a Buy rating.
Analysts told investors the company is "turning the volume up on efficiency."
Looking ahead to the company's earnings, the analysts wrote: "We anticipate Spotify's (SPOT) 2Q23 results will largely be in line across key KPIs (key performance indicators) such as revenue, premium subscribers and MAUs (monthly active users)."
"More importantly, we believe the focus will be on the 3Q guide and in particular, gross margins and operating income given several cost-cutting initiatives the company has undertaken."
The analysts believe Spotify's recent communication on expenses is a key driver of its share performance YTD.
"Along these lines, we anticipate SPOT will reiterate their expectations of sequential gross margin improvement throughout the year. We also expect SPOT to increase prices in 2023, although timing and any benefits from new terms with major record labels are uncertain," they concluded.