Spotify Technology (NYSE: SPOT) reported terrific earnings, growing its revenue 20% year over year, posting its third straight quarter of positive operating profits, and returning to net profitability as well. The company also added 3 million paying subscribers during the quarter, or roughly 1 million per month.

Responding to the news, Benchmark analyst Matthew Harrigan on Wednesday added $50 to his price target, valuing the stock at $375 a share -- and Spotify's growing size was a primary reason.

Quoted on StreetInsider Wednesday, Harrigan highlighted "meaningful music-only profitability" at the music-streaming specialist, with total gross profit margin approaching 28% in the first quarter and likely to hit that mark by Q2. As the analyst argues, Spotify's growing size gives the company "economic leverage with labels" that should help it to negotiate favorable royalty rates on music, as well as advantageous terms when paying for podcasts (and eventually audiobooks, too).

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Source Fool.com