Warner Music Kicks Off Fiscal 2022 With Strong Q1; Streaming Demand Exceeds Our Expectations

Warner Music reported a strong start to fiscal 2022, as the demand for streaming music remains robust. While the traditional streaming services are still expanding, the emergence of new platforms like Peloton and TikTok are helping to drive growth, which exceeded 20% for the fourth consecutive quarter. WMG also benefited from the return of live music even as COVID-19 variants continued to spread. We are increasing our fair value estimate to $37 from $33 to account for continued stronger than expected streaming growth and slightly stronger margin expansion from an improved revenue mix shift.