Universal Music Group Ends 2021 With Strong Top-Line Growth; Streaming Remains Primary Growth Driver

Universal Music posted a slightly stronger than expected end to 2021 as fourth-quarter revenue came in just ahead of and adjusted EBITDA was in line with FactSet projections. Like its peers, the firm's revenue and growth remain highly dependent on streaming, which generated 48% of fourth-quarter revenue, the same as a year ago, and 53% of 2021 revenue, up from 52% in 2020. The importance of streaming increased in 2021 despite strong growth in physical, license, and publishing revenue. We expect that streaming will continue to drive top-line growth and that music will remain the main growth driver for music streaming platforms even as those platforms add new products like podcasts. Our narrow moat and EUR 31 fair value estimate are intact. With the stock trading at a significant discount to our valuation, we view the current price as an attractive entry point for investors.