Universal Music Group NV

UMG: XAMS (NLD)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	€59.00	Xqgsp	Ysmdzkvxz

Universal Music: A Good Quarter, With Areas of Softness That Have No Impact on Our Long-Term View

Matthew Dolgin

Jul 25, 2024

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.

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