Warner Music Group Maintains Hold Rating with $35 Price Target from Morgan Stanley

Morgan Stanley analyst Benjamin Swinburne maintains a Hold rating on Warner Music Group with a price target of $35.00. The company's shares opened at $31.18. Swinburne covers the Communication Services sector and has a 13.0% average return and 58.99% success rate on recommended stocks. The analyst consensus is Moderate Buy with a price target consensus of $34.14, a 9.49% upside from current levels.

Warner Music Group (WMG) has been the focus of analysts' attention following its recent financial performance and strategic announcements. The company's shares opened at $31.18 on July 2, 2025, after reporting robust third-quarter 2025 results. Analysts, including Morgan Stanley's Benjamin Swinburne, have maintained a Hold rating on WMG with a price target of $35.00, while the overall analyst consensus is a Moderate Buy with a price target consensus of $34.14 [3].

The company's third-quarter 2025 earnings report showed a significant rebound from its disappointing second-quarter performance. Total revenue increased by 7%, and adjusted revenue grew by 8% compared to the same period last year. Streaming revenue, a crucial metric for music companies, grew by 3% on a reported basis and 6% on an adjusted basis [3]. This growth is particularly notable as it addresses concerns from the previous quarter when slower subscription streaming growth impacted overall performance.

Warner Music Group's profitability metrics also showed strong performance, with adjusted OIBDA (Operating Income Before Depreciation and Amortization) jumping 16% and the adjusted OIBDA margin expanding by 170 basis points. The company's operating cash flow conversion rate reached 12% of adjusted OIBDA, indicating improved operational efficiency [3].

In addition to its strong financial performance, Warner Music Group has announced several strategic initiatives designed to enhance long-term growth and profitability. The company's comprehensive restructuring plan aims to deliver $300 million in annualized run-rate savings by the end of fiscal 2027. This plan includes workforce reductions, real estate optimization, and AI-driven administrative savings, with funds reinvested in Artist and Repertoire (A&R) and strategic catalog acquisitions [2].

Warner Music Group's partnership with Bain Capital to invest up to $1.2 billion in music catalogs is another significant move. This joint venture leverages third-party capital to expand WMG's rights portfolio without straining its balance sheet. The company's catalog expansion strategy is expected to drive growth in streaming revenue from catalogs, which has grown at 12% annually [2].

Analysts project WMG's adjusted OIBDA to rise by 15.8% YoY in 2026, driven by the $300 million in savings and catalog monetization. The company's current stock price of $29.15 offers a 12.66% upside potential, with the GuruFocus GF Value model estimating an intrinsic value of $34.14, suggesting undervaluation [2].

However, risks remain. The one-time restructuring charge and AI-related uncertainties, such as royalty disputes and creative control issues, could pressure short-term earnings. Long-term investors, however, may be encouraged by WMG's strategic focus on efficiency, catalog expansion, and digital innovation, positioning it to outperform in a consolidating industry.

In conclusion, Warner Music Group's strong financial performance and strategic initiatives have caught the attention of analysts. The company's shares have shown resilience, and its strategic alignment with digital trends and operational efficiency makes it an attractive investment opportunity for long-term investors.

References:
[1] https://www.investing.com/news/analyst-ratings/warner-music-group-stock-price-target-raised-to-35-by-bernstein-socgen-93CH-4181154
[2] https://www.ainvest.com/news/warner-music-group-300m-cost-cutting-strategy-blueprint-margin-expansion-digital-dominance-2508/
[3] https://au.investing.com/news/company-news/warner-music-group-q3-2025-slides-revenue-jumps-7-as-streaming-growth-accelerates-93CH-3966059