Pandora Progressing In Monetization, In-Car Listening & Artist Marketing, Analyst Says

In a report published Friday, Pacific Crest Securities analysts maintained an Overweight rating on

, while raising the price target from $20 to $22. The company's strong 1Q results indicate "progress on several fronts," the analysts said. Pandora made progress in monetization, in-car listening and artist marketing in Q1. This makes the negative reaction in its stock unwarranted, the analysts believe. "We recommend owning P based on its leading scale in mobile and unique ad inventory. The CRB arbitration should remain an overhang, but we continue to believe a reasonable outcome is highly likely." Pandora reported its Q1 advertising revenue at $179 million, ahead of the analysts' estimate of $173 million. This helped the company generated total revenue of $231 million, higher than the estimate of $223 million. In the report Pacific Crest Securities noted, "Strong sales hires suggest further expansion potential and strong competitive positioning. Pandora hired 74 new salespeople in Q1, versus 56 in 1Q14. This suggests a strong competitive position for the company versus other traditional and digital radio services, as well as the potential for faster-than-expected revenue growth as productivity of the new hires ramps later this year and into 2016." The non-GAAP EPS estimates for 2015 and 2016 have been raised from $0.07 to $0.12 and from $0.20 to $0.28, respectively. This upward revision reflects reduced listening hours. "We continue to anticipate sustained average usage of around 45 mins per day, which we believe reflects a stable competitive position. Slightly higher terminal multiple drives price target to $22 from $20," the analysts added.