- Goldman Sachs has initiated coverage of Warner Music Group ( NASDAQ: WMG ) at Buy, pointing to trends shifting in the music company's favor in coming years.
- One of the world's largest music entertainment companies should benefit from "several secular tailwinds," analyst Stephen Laszczyk says, including "growth in subscription & ad-supported streaming and new licensing opportunities created by emerging multi-media platforms."
- As for execution, there's a chance for WMG to expand its adjusted EBITDA margins, improve free cash flow conversion and "accretively" allocate its excess capital, Laszczyk says.
- "As a result, we view WMG as one of the highest quality long-term growth compounders in our coverage group," he said.
- From 2021 to 2025, he's modeling annualized revenue growth of 10.8%; adjusted EBITDA growth of 11.8%; and free cash flow growth of 16.7%.
- The firm launched with a $32 price target, implying 46% upside ahead.
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Goldman Sachs starts Warner Music Group at Buy on tailwinds