Warner Music Group Corp (NASDAQ:WMG) received an upgrade from Bank of America to "Neutral" from "Underperform," with analysts citing improved revenue visibility from new streaming deals and a recently announced $300 million cost-cutting program.
Analysts raised their price objective on the stock to $33 from $28, saying Warner’s recent agreements with digital streaming platforms (DSPs), including Spotify, will boost predictability in the company’s subscription streaming business starting in fiscal 2026.
"Coupled with the recent cost savings announcement last week, there should be a clear path to healthier earnings growth," the analysts wrote.
Warner's restructuring plan, announced on July 1, includes $200 million in headcount reductions and further cuts in selling, general and administrative (SG&A) expenses. The company also revealed a joint venture with Bain Capital to invest up to $1.2 billion in music catalog acquisitions across recorded music and publishing, which Bank of America says enhances its ability to expand its M&A pipeline and artist development efforts.
The brokerage raised its OIBDA forecasts, now projecting $1.61 billion in fiscal 2026 and $1.85 billion in fiscal 2027, up from prior estimates of $1.48 billion and $1.65 billion, respectively.
While Warner’s fiscal third-quarter results are expected to reflect ongoing challenges in ad-supported streaming and tough year-over-year comparisons, Bank of America said growth should accelerate in fiscal 2026. A potential renewal of Warner’s deal with TikTok, last inked in July 2023, could also drive upside in emerging streaming revenue.
Shares of WMG were set to close around 1.9% higher on Wednesday afternoon in New York.