Why Warner Music Group shares jumped 13% on Tuesday

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What happened

Warner Music Group (NASDAQ: WMG) shareholders beat a bull market on Tuesday, with shares rising 13% as of 3:30 p.m. EDT. The rise came following a major upgrade to the stock price target by a Wall Street investment firm.

So what

Credit Suisse analyst upgraded the bank’s rating on the music giant to outperforming (or buying), saying in a note to clients that Warner Music is expected to be a winner as demand continues to shift to streaming. The analyst landed on a short-term price target of $ 48 per share, about 19% above Monday’s closing price.

Image source: Getty Images.

Now what

Warner Music Group went public in June 2020 and investors are still trying to get a feel for its earning potential. Its latest earnings report, delivered in early August, showed encouraging results with revenues up 33% while the company generated significant profits.

Executives at the time pointed to what they called “impressive” streaming numbers. “We continue to create value through our extensive services to artists and songwriters,” CFO Eric Levin said in a press release.

Tuesday’s target price hike and odds upgrade is a gamble that this operational boost is just the start and that Warner Music will continue to earn as a platform that attracts global superstars from around the world. the music. There is plenty of room for growth in the streaming space for Warner Music, and capitalizing on that could allow it to extend its positive momentum into 2022 and beyond.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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