"The music industry is shifting from a transactional to on-demand model, and Spotify is well positioned to double its subscriber base, expand gross margin, and generate material free cash flow," Patterson wrote. It has "one of the best growth rates in tech – there is a scarcity of companies poised for 40 percent annual profit growth through 2019."

The company's key drivers, including market share gains, new geographies and family plans should boost the number of paid subscribers to 150 million from current levels around 75 million in as few as two years, Raymond James analyst Justin Patterson told clients Thursday.

Spotify represents a compelling buying opportunity thanks to one of the best growth outlooks in technology, with subscribers set to double by 2020, according to Raymond James.

Patterson, who initiated coverage on Spotify with a strong buy rating, told clients that Wall Street is underappreciating the company's advantages, including a team of over 1,400 engineers, over 200 petabytes of data and a presence in 65 countries worldwide.

He also said that while subscribers will likely prove a key metric for Spotify (akin to Netflix), he isn't all that worried about Apple or Amazon in the streaming landscape.

"Large technology companies are arguably the biggest competitive threat to Spotify. [But] when we examine the go-to-market strategies, we see few ways in which these businesses can intensify competition and attract more users," he said.

"We doubt Apple ever overtakes Spotify ever in music," he added. "Rather, the risk is that Apple slows Spotify's growth in markets where iOS devices have large installed bases."

Spotify shares gained 2.5 percent over the past month and more than 6.5 percent since its unusual trading debut in early April. Shares were down nearly 1 percent in early trading Friday.

Patterson sees Spotify shares rallying 19 percent to $190 over the next 12 months. The stock has 10 buy ratings, six holds and one sell, according to data provided by FactSet.