Universal Music Group (UMG) is “well placed” to remain a leader in the global entertainment industry, according to Deutsche Bank, which also upgraded its price target.
Deutsche rated the entertainment conglomerate a ‘buy,’ raising its share price target to €26, from €25 previously, and compared to its last close at €22.52.
“UMG offers sustainable growth in a relatively defensive sector within the media landscape, combined with attractive margins and healthy cash flow generation,” the bank said.
It added the firm, which boasts a portfolio including the likes of Abbey Road Studios, Island Records and Motown Records, has “further potential to deliver earnings upgrades”.
UMG is due to report full-year earnings on March 2, having recorded a 13.3% increase in revenue to €2.66bn in the third quarter, alongside a 15.4% increase in pre-tax earnings to €539mln.
Looking ahead, chief executive Lucian Grainge said: “we are continually improving the monetization of music and music-related content, generating high-quality revenue and recurring income from more sources than ever before.”
Record labels, like UMG, Sony Music Entertainment and Warner Music Group, have found themselves riding the streaming wave in recent years, adopting the rise in online entertainment to become fast-growing profitable businesses again.
Of these, UMG is the largest, with a global market share of 37.5%.