The firm downgraded Warner Music to neutral and lowered its price target to $26 per share from $39.
Atlantic's new price target represents 6.6% upside from the stock's $24.39 close on Thursday. Analyst Hamilton Faber noted that increased competition in the streaming space coupled with the growth of AI-based music could be the perfect storm that will weigh on the stock.
" Faber said there is potential for some optimism that a deal with TikTok, which licenses music from artists under the Warner label for use on the social media platform, could cushion some of the hit to the stock as well as Spotify potentially raising its prices. "All in, it is clear that the top line growth that we had originally envisaged for the music labels is not quite playing out as expected," Faber said.
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