Strategic Alternative Review Not Enough To Push Nomura Bullish On Pandora

Pandora Media Inc P shares are falling after missing first-quarter estimates after the close on Monday, however, the bigger news was surrounding a $150 million investment in the company by KKR.

Some believe the investment is part of a move to make the company more attractive for a potential sale. Pandora’s struggles are notable giving the intense competition the streaming music space has seen over the past couple of years.

Staying Sidelined

According to a report from CNBC, the company is actively trying to sell itself and believes it can get the deal done within 30 days.

“Given the fact that Pandora’s business remains in a state of transition, the stock is near a point where the importance of near-term core operating results [is] being obfuscated by 1) the shift to a new subscription business model, where subscribers are growing 20%/year, albeit off a small base; and 2) the addition of new investors and active board members, intended at least in part to explore the company’s strategic alternatives,” said Nomura analysts.

The firm noted Pandora’s first-quarter results were disappointing as the company lowered its second-quarter and full-year revenue guidance. As a result, Nomura lowered its price target on the company to $12 from $14. The firm maintains a Neutral rating on Pandora.

At last check, shares of Pandora were down 3.8 percent at $10.01.

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