HSBC Downgrades Universal Music Group to Reduce After Q2 Miss; Forecasts Revised

04:37 AM EDT, 08/14/2026 (MT Newswires) -- HSBC Global Investment Research lowered its rating for Universal Music Group (UMG.AS) to reduce from hold, citing its second-quarter earnings miss amid ongoing margin headwinds. "Going into the Q2s, we had expected the tempo from Q1 to play on, i.e., soft but stable margin progression and for the integration of Downtown Music (DTM) to remain the focus. However, Q2 adjusted EBITDA of EUR674m was 5.1% below consensus of EUR710m, and the shares fell c26% on the day. We expect the margin dilutors to remain over the medium term," according to a Thursday note. The research firm expects continued margin pressure for the music company as artists demand larger revenue shares, cost savings are redirected toward expanding expenses, and lower-margin distribution deals increase in scale. "We see minimal long-term margin gains for the business, with the upper end of medium-term margins of 25%, compared to 21% in H1, unlikely. Our DCF-based TP declines to EUR12.10 (from EUR18.50), reflecting the cuts to our estimates. We wait to see consistent margin progression coming through," analysts added. HSBC cut its adjusted EBITDA projections for full-year 2026 through 2028 by 2%, 8% and 11%, respectively.