WMG Should I Buy
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BUY WMG now. Despite slightly soft near-term technicals, the setup is attractive for an impatient buyer: hedge funds are accumulating, Street price targets imply sizable upside ($35–$40 vs. $29.98), and the company just posted strong 2025/Q4 growth. With earnings (Feb 5) approaching and option markets showing strong call-skew in open interest, the risk/reward favors taking a position now rather than waiting for a cleaner technical entry.
Trend/price action: WMG closed at $29.98, just below the pivot ($30.21). Near-term levels: support S1 $29.54 (then S2 $29.12); resistance R1 $30.89 (then R2 $31.31). A decisive reclaim of ~$30.21 improves momentum; losing $29.54 increases downside risk toward ~$29.12. Momentum: MACD histogram is negative (-0.109) but contracting (bearish momentum is fading, not reversing yet). RSI(6) at 42.6 is neutral-to-soft, consistent with consolidation rather than a strong uptrend. Moving averages: Converging MAs suggest a coiling/indecision phase—often a precursor to a larger move, but direction needs confirmation via a break above resistance. Pattern-based odds: Similar-pattern model indicates ~60% chance of -1.01% next day, ~flat next week (+0.26%), and a more constructive next month (+11.97%), aligning with a “near-term chop, medium-term upside” profile.
Intellectia Proprietary Trading Signals
Earnings catalyst: Next earnings on 2026-02-05 (after hours); elevated IV indicates a meaningful move is anticipated.
Institutional flow: Hedge funds are buying; reported buying amount up ~127% over the last quarter.
Fundamental narrative: Streaming subscriber growth may be maturing, but multiple analysts highlight the next leg being pricing-driven—potentially supportive for revenue per user and royalty economics.
Analyst support: Recent initiations/upgrades and multiple Buy/Outperform ratings with targets well above the current price.
Technicals not yet bullish: Price below pivot with MACD still negative; near-term momentum remains soft.
Margin pressure: Gross margin declined YoY (2025/Q4), which could re-emerge as a focus if costs/artist spend rise.
Event risk: With very high implied volatility into earnings, results/guidance that disappoint could trigger a sharp move down.
Latest quarter: 2025/Q4. Growth: Revenue rose to $1.868B (+14.6% YoY). Profitability inflected sharply: net income $105M (+162.5% YoY) and EPS $0.21 (+162.5% YoY). Quality/mix: Gross margin fell to 39.08% (-8.09% YoY), a notable negative trend that investors may monitor even as earnings improved. Overall: Strong top-line and bottom-line growth in the latest quarter, offset by weakening gross margin—net positive, but not “perfect.”
Recent trend: Ratings skew positive with improving tone since mid-December. Morgan Stanley upgraded to Overweight (PT $37). MoffettNathanson initiated Buy (PT $38). Citi reiterates Buy (PT $40, slightly trimmed from $41). Several firms lowered targets in December (Wolfe to $36, Jefferies to $35), while Goldman nudged to $32 and remains Neutral; BofA is Neutral with PT $33. Price target takeaway: The active Buy-rated targets cluster ~$35–$40, implying ~17%–33% upside from $29.98; Neutral targets cluster ~$32–$33 (still modest upside). Wall Street pros: (1) Pricing power/streamer payment tailwinds kicking in, (2) WMG viewed as a laggard with catch-up potential, (3) more visibility from DSP agreements. Wall Street cons: (1) Mature streaming subscriber growth, (2) margin/cost pressures, (3) balanced risk/reward cited by Neutral-rated firms. Influential/politician activity: No recent congress trading data available; insider trading trend is neutral.
