Universal Music’s float has opened up another way for investors to play the music streaming booms according to analysts at Liberum.
UMG floated this week in Amsterdam but still looks good value given its market position and strengths even after jumping almost 30% said the broker.
“Given UMG’s dominance in this space, the barriers to entry, revenue & EBITDA growth rates and higher percentage of recurring revenues coming from streaming, the valuation surprised me as low,” said Liberum’s Harry Read.
The group is “one of few ways to gain exposure to music streaming and publishing revenues in Europe, with the other notable player obviously being Spotify,” he added.
“The outlook for the group does not seem to tail off as the market becomes more penetrated, with a midterm outlook of a high single-digit revenue CAGR, mid 20s EBITDA margin and a 50% pay-out ratio of net profits in dividends.”
Shares in UMG, which floated at EUR18.50 were changing hands at EUR23.63 today.