Warner Music Group (WMG -0.93%) shareholders trounced a rising market on Tuesday, with shares up by 13% as of 3:30 p.m. EDT. The surge came following a significant stock price target upgrade by a Wall Street investment firm.
An analyst at Credit Suisse hiked the bank's rating on the music giant to an outperform (or buy), saying in a note to clients that Warner Music should be a winner as demand continues to shift toward streaming. The analyst landed on a $48 per share short-term price target on the stock -- about 19% higher than Monday's closing price.
Warner Music Group IPOed in June 2020, and investors are still trying to get a feeling for its earnings potential. Its last earnings report, delivered in early August, showed encouraging results with revenue rising 33% while the company generated significant profits.
Executives at the time highlighted what they called "impressive" streaming numbers. "We continue to create value through our wide-ranging services to artists and songwriters," CFO Eric Levin said in a press release.
Tuesday's target price hike and rating upgrade amount to a bet that this operating boost is just the beginning, and that Warner Music will continue winning as a platform that attracts global music superstars. There's plenty of room for growth in the streaming space for Warner Music, and capitalizing on that could allow it to extend its positive momentum into 2022 and beyond.