Universal Music Group NV
UMG: XAMS (NLD)
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
€47.00 | Rxhh | Lvqvynsml |
Universal Music: A Good Quarter, With Areas of Softness That Have No Impact on Our Long-Term View
Universal Music posted strong second-quarter sales and adjusted EBITDA, but growth from subscription streaming service recordings, the firm's biggest source of revenue, decelerated, and free cash flow was weak. We believe free cash flow will improve significantly in the second half, which is seasonally stronger, and quarterly vacillations in growth rates don't change our view that there is significant long-term growth ahead for streaming revenue. We are maintaining our EUR 31 fair value estimate, leaving shares modestly undervalued in our view.