Spotify Technology SA’s podcast-driven rally in late spring may have been overdone, according to a UBS Group AG analyst who double downgraded the audio streaming company’s rating to sell from buy.

Although UBS sees podcasting as “a positive thematic narrative,” Eric Sheridan wrote in a note, Spotify’s “long-term opportunity” is “now solidly reflected at current levels.”

Shares of the Stockholm-based service have jumped 47 per cent since May 19 when it signed a exclusive, high-profile agreement with Joe Rogan and ensuing deals with DC Comics and Kim Kardashian West. The stock dropped as much as seven per cent in New York Tuesday.

“One key theme that has seemed to become a tenet of the bull case is that podcasting will materially alter supply costs dynamics with the music industry,” Sheridan wrote. “We are skeptical that this will be the case.” Podcasting is more likely to expand Spotify’s user base than significantly change the cost of content, he said.

Other investment firms have grown cautious about Spotify. AllianceBernstein Holding LP and Guggenheim Securities LLC have both downgraded the stock recently, and Wells Fargo described shares as “over exuberant.”

Despite the rating change, UBS’s long-term growth outlook for Spotify remains positive and Sheridan raised his price target on the shares to US$204 from US$189. Opportunities, such as shifts in audio consumption trends, are “key under-monetized consumer internet themes,” he said.