Investment bank UBS today (Feb. 24) upgraded its rating on EMI Group, displaying optimism about the prospect of a recovery for the recorded music industry.
UBS bumped up its price target on EMI Group plc to 347p from 261p. Stock in EMI, which has rallied strongly of late, was down 2.18% to 258p in late afternoon trading.
In a note titled “a brighter future,” UBS says its decision was prompted by “a steady flow of positive data” on the performance of the music markets in 2003. UBS now expects the year-on-year drop in value for the recorded music industry in 2003 to be about 6.3%, compared to its previous prediction of a 7.1% fall. A revised drop of 3.1% is now forecast by UBS for 2004, rather than the anticipated 4.7%.
“We now believe we have sufficient evidence that the music industry is undergoing recovery and as a result, consider our medium-term forecasts as conservative,” UBS says.
The investment bank also points to EMI’s market-share gains in the U.S., and “a shift in sentiment” with respect to the Internet, which is now increasingly seen as a potential business opportunity, as reasons for EMI’s improved outlook.