Spotify (NYSE:SPOT) was cut to Neutral from Buy at Monness, Crespi, Hardt in a note Thursday, with the firm's analysts not assigning the stock a price target.
They told investors that after a sharp rally and with the Spotify price hikes rolling out, they have decided to move to the sidelines.
"Spotify’s stock has enjoyed a strong rebound this year, racking up a gain more than double the average increase for our coverage universe in 2023, rising 95%," they explained. "Given this strong outperformance and our mounting concerns surrounding the potential collateral damage from this downturn, we are stepping to the sidelines on Spotify."
Spotify is scheduled to report its 3Q results on October 24, and while the analysts said it is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure, they feel that the competition is fierce, and margins thin.
As a result, the firm believes that for Spotify, "the darkest days of this downturn are ahead of us."
The streaming giant's shares are down over 2% on Thursday following the note, trading around $150.40 per share.