Wedbush Reiterates Neutral Rating on Pandora Media on Good Q4 Results, Bullish Guidance

In a report published Friday, Wedbush reiterated its Neutral rating and $11.50 price target on Pandora Media

. Wedbush noted, “While we very much admire Pandora's ability to build a large and loyal user base, we recommend that investors take a wait-and-see approach to Pandora shares due to looming competition from Apple and Google, the uncertain outlook for royalty rates, and a lack of near-term profitability. Pandora trades at an EV/active user of $40, which we believe is too high given its limited profitability. In addition, we believe that there is some risk of competition, and a lesser risk that long-term royalty rates could increase. Should the company begin to show operating leverage, we are prepared to revisit our rating. Until then, we are maintaining our NEUTRAL rating and $11.50 price target, which reflects a multiple of 23x likely CY:15 EPS of $0.50.” Pandora Media closed on Thursday at $11.73.