Pandora's Strategy 'Begins To Gel,' Barrington Says In Upgrade

Streaming music provider Pandora Media Inc P reported Tuesday a top-and-bottom-line beat in its second-quarter results, but perhaps more important confirmation its new strategy "begins to gel," according to Barrington.

The Analyst

Barrington Research's James Goss upgraded Pandora Media from Market Perform to Outperform with a new $11 price target.

The Thesis

Pandora, under a new management team, implemented multiple initiatives and investments over the past year which is starting to show results, Goss said in a note. Around 22 million listeners engage with ad impressions, many of which are within the attractive younger demographic group. The acquisition of AdsWizz gives the company new advertising capabilities to create a large base of inventory which attracts advertisers to the audio ecosystem.

Meanwhile, Goss said Pandora showed an increase in total subscribers of 351,000 from the prior quarter to 5.98 million. Since the launch of the Premium service, subscribers levels increased by more than 1 million while less financially lucrative offers like family plans have had limited impact.

Overall, Pandora's "huge" listener base, coupled with management's commitment to target advertisers and new users while simultaneously pursuing partnerships and programmatic ad sales, bodes well for the company's outlook and supports upside for the stock.

Price Action

Shares of Pandora were trading higher by more than 20 percent near $8 Wednesday morning.

Related Links:

Morgan Stanley: Pandora's Path To Revenue Growth Isn't Guaranteed

Pandora's AdsWizz Acquisition Turns Raymond James Bullish