Pandora Gets Fourth Upgrade In A Month, This Time From Morgan Stanley
A little over a month back, Pandora Media Inc (NYSE: P) had received upgrades from analysts at B. Riley, Axiom and Scotiabank. In a research note published on June 27, Morgan Stanley’s Benjamin Swinburne upgraded the rating for the company to Overweight, while raising the price target to $15.
Analyst Benjamin Swinburne noted 2 drivers that could lend upside:
- Pandora's core radio business is being driven by “highly engaged listeners,” and the business continues to grow profitably. “This profitability was not clear until the end of last year, after the Copyright Royalty Board set its cost structure through 2020,” Swinburne wrote.
- After 15 years of “digital indigestion,” the music industry seems to have identified its growth strategy, namely subscription on-demand. Pandora appears well positioned to help drive that growth, given its leading market share and high engagement in its core radio business.
“We expect Pandora to negotiate access to on-demand or interactive rights with the music labels that both leave its core business economics largely unchanged, and enable it to make money in on-demand, the analyst commented. He estimated the core business to be worth ~$11 currently, adding that if on-demand worked, the entire enterprise could reach $20 by 2020.
Pandora’s shares have lost about 60 percent over the past couple of years, since core radio growth slowed more than expected, although it was at a healthy 27 percent in 2015, Swinburne pointed out.
Latest Ratings for P
|Oct 2016||Bank of America||Downgrades||Neutral||Underperform|
|Oct 2016||Credit Suisse||Maintains||Neutral|
|Oct 2016||Goldman Sachs||Maintains||Buy|
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