SunTrust 'Very Comfortable' With Pandora Assumptions

SunTrust on Monday issued a report on Pandora Media Inc P and remained "very comfortable" with its SoundExchange rate assumptions.

According to analyst Robert S. Peck, SoundExchange had to proposed to the Copyright Royalty Board (CRB) that "that eligible subscription and non- subscription non-interactive services pay the greater of $0.0025 per track (increasing $0.0001 per year throughout the [2016-2010] term) or 55% of revenue."

Peck modeled "non-subscription rates for the 2016-2020 term starting at $0.0015 and increasing $0.0001 per year" with "subscription rates for the 2016-2020 term starting at $0.0025 and increasing $0.0001 per year."

Peck felt that the SoundExchange demand was a negotiating tactic and cautioned "investors not to read too much into this initial proposal."

The report concluded that with the expectation that the CRB will "set rates based on open-market transactions for comparable services with examples being Apple with the labels and Pandora with Merlin. In this light, we remain comfortable with our assumptions for continued modest increases in rates through the 2016-2020 term in a similar cadence to current term."

SunTrust rates Pandora Media a Buy with a $34 price target.

Pandora Media traded at $21.01 in the premarket, up 0.43 percent.