Morgan Stanley Weighs In On Pandora Growth, Value

Morgan Stanley started coverage of Pandora P Wednesday at Equal-weight with a $28 price target (2.9 percent upside).

Analyst Benjamin Swinburne began by commenting that Pandora will be able to steal about five percent market share from the broadcast radio market over the next five years. This will lead to CAGR between 25 and 30 percent over the period.

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Swinburne further commented on growth, “We assume that the listener hour lift from integration more than offsets the impact of newer entrants, both passive (Apple’s iTunes Radio) and active (Spotify). Our base case assumes active listeners grow from ~75M today to ~130M in ‘20, with hours per listener up modestly.”

Regarding valuation, Morgan Stanley’s estimates are roughly inline with Wall Street in upcoming years. The $28 price target is based on approximately 15 times EV/EBITDA.

Shares of Pandora opened slightly higher at $27.33.