Investing

Earnings Previews: Kraft Heinz, Spotify, T-Mobile

Spotify

Steaming music and podcast platform Spotify Technology S.A. (NYSE: SPOT) has seen its share price plunge by about 65% since posting a 52-week high in early November. Former President and First Lady Barack and Michelle Obama announced last week that they are leaving the company’s podcast platform. Another top podcast, “The Joe Rogan Experience,” claims to have added 2 million subscribers since his dust-up with Spotify last year, which resulted in more than 70 of Rogan’s podcasts being taken down. Is this a buying opportunity?

Analysts appear to believe so, if only for the longer term. Of 29 brokerages covering the firm, 16 have a Buy or Strong Buy rating on the stock and another 10 have a Hold rating. At a share price of around $112.80, the upside potential based on a median price target of $224.74 is 99.2%. At the high price target of $300.42, the upside potential is 187.6%.

First-quarter revenue is forecast at $2.8 billion, down 8.4% sequentially and up about 11.1% year over year. Spotify is expected to post a loss per share of $0.23, flat sequentially and smaller than the year-ago loss of $0.29 per share. For the full 2022 fiscal year, analysts have forecast EPS of $0.09, better than last year’s loss of $0.20 per share, on sales of $12.42 billion, up 12.8%.

Spotify is expected to post a profit of $1.11 per share in 2023. The stock now trades at 101.4 times those expected 2023 earnings, and 45.4 times estimated 2024 earnings of $2.49 per share. Spotify’s 52-week range is $164.41 to $387.44. The company does not pay a dividend, and total shareholder return for the past 12 months was negative 40%.

T-Mobile

After peaking in mid-July of last year, wireless carrier T-Mobile US Inc. (NASDAQ: TMUS) has seen its share price fall by about 32%, before closing out the past 12 months down by about 15%, worse than AT&T (down 4.3%) or Verizon (down 8.7%). For the year to date, T-Mobile stock is up 10%, more than AT&T (up 8.1%) or Verizon (down 2%). The company’s 5G network is acknowledged to be the best in its class, the company’s margins are expanding and its long-term prospects look good.

Analysts remain bullish on the stock, with 27 of 31 rating the shares a Buy or Strong Buy and another three having a Hold rating. At a share price of around $127.70, the implied gain based on a median price target of $160.00 is about 25.3%. At the high target of $230, the implied gain is 80.1%.


First-quarter revenue is forecast at $20.1 billion, down 3.3% sequentially but up about 1.7% year over year. Adjusted EPS are pegged at $0.32, down 70.7% sequentially and 65.6% lower year over year. For full fiscal 2022, analysts have forecast EPS of $2.32, down 45.8%, on sales of $81.01 billion, up 1.1%.

T-Mobile stock trades at 55.2 times expected 2022 EPS, 23.6 times estimated 2023 earnings of $5.42 and 15.5 times estimated 2024 earnings of $8.25 per share. The stock’s 52-week range is $101.51 to $150.20. The company does not pay a dividend, and total shareholder return for the past 12 months was negative 4.3%.

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