Bank of America puts Spotify on its Q3 top picks list, citing clearer profit and free-cash-flow visibility

Bank of America analysts named Spotify as one of its top picks for the third quarter, arguing that the streaming company’s outlook is becoming more predictable as it rolls out new product features and potential revenue levers. In the broker’s coverage, Spotify shares were described as being in a prolonged slump, but the firm said near-term catalysts could help reset investor expectations.

The call came with a “Buy” rating and a $685 price target on Spotify, implying about 41% upside from the stock’s closing price at the time cited in the post. The note also characterized Spotify’s business plan as moving from broad targets toward “execution,” suggesting that investors may soon be able to better gauge how revenue growth and profit translate into cash generation.

Bank of America’s framework emphasized what it said is improved visibility for continued profit and free-cash-flow growth. The analysts pointed to subscription price increases and new tiers, plus what they described as deeper penetration of incremental services. The services highlighted included podcasting, audiobooks, and fitness, areas where Spotify has been expanding beyond core music streaming.

The analysts’ positive view also leaned on Spotify’s recent product roadmap and long-term targets. The company recently unveiled AI-powered music and podcasting features and other updates for creators, along with new offerings aimed at “superfans,” according to the post. At a May investor day, Spotify was said to have projected mid-teens annual revenue growth and higher profit margins through 2030, positioning those goals as part of the case for a rerating.

Despite the upbeat roadmap, the post noted that Spotify’s shares have struggled. It said the stock was down roughly 38% from its peak in June of the prior year and about 16.3% year to date, describing the period as a protracted decline even after an operational update.

As context for why the stock had disappointed, the post referenced Spotify’s first-quarter results, where revenue rose 8% and monthly active users rose 12%, while it also said guidance softness overshadowed the earnings beat at the time. That mix, the post suggested, kept the market focused on execution risk rather than the company’s longer-term plan.

Bank of America’s Q3 top-picks roster included other large-cap and software names alongside Spotify, such as IBM, Snowflake, Visa and Walmart. The inclusion of Spotify underscores how the brokerage is grouping areas where analysts see potential to improve margins and cash flow, rather than only bets on near-term growth.

Still, several key details remain unclear from what was posted, including how much of the profit and cash-flow visibility depends on specific timing of pricing changes, how quickly incremental services adoption is expected to accelerate, and what assumptions drive the $685 target. The post also attributes elements of the argument to an investor note, but it does not reproduce the full methodology or supporting schedules, leaving investors to reconcile the headline catalysts with the underlying forecasts.