Pandora Earnings Preview: Wedbush Cites 'Listener Hour Strength'

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Pandora Media
P
is set to report earnings this Thursday, April 24, and Wedbush Equity Research is expecting the media giant to report result at or above its bullish estimates. The estimates are primarily driven by listener hour strength and RPM momentum. The firm is also maintaining its Outperform rating and has set its 12-month price target at $35.00 per share. Wedbush cited this, “Total reported listener hours were 4.80 billion, above our estimate of 4.75 billion, creating the potential for higher advertising revenue. Our revenue estimate is $176 million vs. consensus of $175 million and guidance of $170 – 176 million. Our EPS estimate is $(0.12), vs. consensus of $(0.14) and guidance of $(0.16) – (0.14).” Pandora Media also released its audience metrics for earlier this month which included better-than-expected listener hours. Wedbush had predicted the media giant to report listener hours of 1.66 billion, yet the company reported hours at 1.71 billion, up sequentially from 1.51 billion. Wedbush is also expecting Pandora to show signs of operating leverage again. Wedbush picked the 35 price target because, “we see Pandora users continuing to grow, we think it is appropriate to value the company based on its year-end 2014 number of users. We assign a 15x multiple to our $7 operating profit per user per year, and arrive at a value per user of $100. At $100 per user, 76.2 million users at year-end, and a year-end share count of 218 million, we arrive at our $35 price target, reflecting continued strong user growth and the company's recent capital raise. Our recent upgrade was based solely upon valuation. The March Audience Metrics showed a rebound in listener hour growth, which is the key driver of Pandora's revenue growth.” Shares of Pandora are up $1.34 or 4.96 percent to $28.36 per share.
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Posted In: EarningsNewsPreviewsTrading IdeasMichael PachterWedbush
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