The price of Spotify stock (NYSE: SPOT) is rising on Monday as a Wells Fargo analyst increased his bullishness on the company, saying it was now “off margin probation.”

Spotify stock could be worth $180

This morning, Steven Cahall upgraded the tech company to “overweight” and disclosed a price objective of $180, representing a staggering 50% increase over its previous closing.

The main reason the analyst is enthusiastic is that he believes Spotify Technology SA’s margins will rise significantly in the future. It says in his note:

When we upgraded Spotify stock to equal weight, it was predicated on management showing progress against margin targets. Opex is demonstrating leverage as OI losses improve, and we think SPOT will be break-even in 1Q24.

Spotify announced last week that it had 489 million MAUs at the end of the fourth quarter, up 20% from the previous year.

Price hike will help boost margins

According to the Wells Fargo analyst, Spotify Technology’s projected pricing increases this year would help boost gross margins even more.

He loves Spotify stock due to the anticipated advertising recovery and further market expansion.

This is during an ad recession, so, podcasting is likely a bit behind. We see margins and valuation as upward bound with margin delivery rerating SPOT. We’re ahead of Street on gross and op margins for `23-`25.

Additionally, on Monday, analysts at Atlantic Equities advised investors to purchase Spotify shares, which has increased by more than 45% so far this year

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