Shares of Warner Music Group rose as much as 18 percent on Monday after an analyst report upgraded the company on the belief that music industry trends were stabilizing after six months of declines.

Analysts at Goldman Sachs also noted that Warner Music's management, led by Edgar Bronfman, has shown continued superior execution, resulting in nine consecutive quarters of U.S. album market share gains.

Warner shares have fallen nearly 45 percent in the last year. In recent months the company has aggressively tried to strengthen its balance sheet by canceling its dividend and slowing capital spending in order to drive free cash flow to pay down debt.

We believe that Warner Music Group has had the opportunity to buy its own bonds at a significant discount to par in the open market over the last six months, said analyst Ingrid Chung in the client note.

Chung also highlighted the recent introduction of variable pricing for digital songs at Apple Inc's (AAPL.O) iTunes Store and other retailers as a positive for the future.

We believe that variable pricing could drive higher volume and higher average revenue per track, although margins may remain at the same levels, the analyst said.

Warner shares were up 29 cents or 9.4 percent at $3.37, off an earlier high at $3.64, in midmorning on the New York Stock Exchange on Monday. (Reporting by Yinka Adegoke, editing by Matthew Lewis)