Universal and Warner: Strong Competitive Advantages and Music Industry Growth Make Them Attractive

We’ve reevaluated the major record companies and think these firms will remain critical to artists and are positioned to continue taking their fair share of a growing music industry. For the two pure-play majors, we have upgraded Universal’s moat rating to wide from narrow, and we are maintaining our narrow moat rating for Warner. We’re maintaining our EUR 31 fair value estimate for Universal and raising Warner’s fair value estimate to $37 from $36.