11:49 AM EDT, 07/08/2024 (MT Newswires) -- Spotify Technology ( SPOT ) is poised for growth amid larger-than-projected US price hikes and the higher than expected incremental margins on these increases, Morgan Stanley said in a note.

The audio streaming company recently introduced a higher priced audio bundle that is now available in markets representing roughly 50% of revenue, Morgan Stanley said.

"Consumers can 'opt-out' of these higher priced services, but we expect these higher price points to yield above-consensus revenue and gross margins in 2H24," the report said.

Morgan Stanley reiterated its overweight rating on Spotify ( SPOT ), with a $370 price target. The firm named Spotify ( SPOT ) as its top pick in media and entertainment, replacing Warner Music Group ( WMG ) , according to the note.

"As we look at additional verticals in the future -- short-form video, live events, etc. -- we now see a potential template for driving engagement and monetization," Morgan Stanley said.

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