Universal Music: Subscription Streaming Revenue Rebounds as the Business Continues to Look Healthy

After last quarter’s soft results spooked the market, third-quarter recorded music subscription revenue bounced back to what we expect is a long-term trendline. Overall revenue growth decelerated slightly from a very strong second quarter, and we expect most revenue streams to remain choppy from quarter to quarter. Universal does not report full financials or free cash flow with its third-quarter results, but EBITDA growth continues to outpace revenue growth. We are maintaining our EUR 31 fair value estimate and believe Universal’s disproportionate share of global music rights—the key factor behind our wide-moat rating—will underpin an extended time frame of solid growth.