Pandora Upgraded To Buy Amid Wall Street's Low Expectations

B. Riley & Co.'s Sameet Sinha upgraded Pandora Media Inc P from Neutral to Buy, while raising the price target to $15.00 from $10.00.

"Expanding margins, favorable new Product economies should drive upside" do not reflect Pandora's low price, said Sinha. Pandora traded at 1.4x 2017 revenue and comparable rivals trade at 3.0x, which clearly indicated expectations pulling back, according to the analyst.

Related Link: Pandora Sale: Analyst Says Not So Fast

In addition, Sinha sees growing pricing power at +40 percent year-over-year, accelerating from +15 percent year-over-year in 1Q15, providing "more headroom for growth."

'Our $15.00 Conservative Price Target'

finally, although Sinha does not base his investment thesis on a takeout expectation, the analyst believes Pandora is an attractive property with scale, data, engagement and a highly targetable audience. Furthermore, "a takeout should be at or above our conservative $15.00 price target."