Bob Peck: Pandora's Monetization Overshadows Stalling Hours Growth

In a report published Friday, SunTrust Robinson Humphrey analyst Robert S Peck maintained a Buy rating on

, with a price target of $25 on continued monetization tailwinds. Analyst Robert Peck pointed out that Pandora was a leading internet radio webcaster with over 80 million active users. The company's growth potential depends on its ability to build its sales force and drive monetization. The company reported better-than-expected 2Q results with ad revenues of $231 million on RPM of $49.94. The better monetization was driven by mix shift to higher CPM local, up 67 percent y/y, new sales hires and increased ad load in select market demos, Peck mentioned. In the report SunTrust noted, "Looking forward, we expect additional tailwinds from programmatic mobile display and the sponsored listening ad unit (a strong performer for Spotify)." Pandora's Users and Listener hours came in at 79.4 million and 5.30 billion, well below the consensus estimate of 80.3 million and 5.60 billion, respectively. The company attributed the decline in average skips per hour as the factor hindering the hours growth. Pandora's quarterly revenues at $286 million and EPS of $0.05 were marginally ahead of the consensus estimate of $283 million and $0.02, respectively.