Wells Fargo sees outperformance from Spotify ahead. The bank, which has an overweight rating on the audio streaming giant, named the stock a top pick and upped its price target by $50 to $470. That implies about 24% upside from Friday’s close. Analyst Steven Cahall is especially bullish on the company’s incremental margins in particular, citing price increases, its audiobooks and bundles— and an evolution in its dynamics with record labels more broadly as catalysts for growth. “Incremental Premium gross margins imply that Spotify’s evolving product mix and Label relationships are improving the bottom-line,” he wrote in a Monday note. “SPOT is also efficiency-focused on overhead costs. These are all the components of a premium growth stock.” When it comes to the company’s relationship with labels, Cahall estimates that about a third of record companies’ revenue in general comes from Spotify, and that’s expected to grow. “We think SPOT is viewed as a positive actor due to its investments in [user interface] and cont’d sub growth,” the analyst said. “More likely, we think SPOT and its Label partners could look to find new avenues of monetization, which might incl. super fan engagement, HiFi, wholesale pricing, etc.” “We think the biggest/most likely SPOT/Label incremental strategy is charging a token subscription fee to Ad-supported subs in the most mature markets,” the analyst also said. “We think it’s so compelling that it’s inevitable.” In the long term, Cahall is staying bullish on Spotify’s gross and operating margins, seeing the latter reaching more than 14% in the second quarter of 2026 and about 18% by the end of the decade. SPOT YTD mountain SPOT, year-to-date The stock moved nearly 1% after Cahall’s call. Shares have surged nearly 34% in 2024 and almost 18% in the past three months.