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UPDATE: Raymond James Upgrades Pandora

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In Wednesday's morning summary, Raymond James analyst Aaron Kessler upgraded Pandora Media (NYSE: P) from Market Perform to Outperform and announced a $31 price target.

Kessler outlined key factors he believes make Pandora an attractive stock.

User/listener hour growth: Kessler models listener hours will "accelerate" 22 percent in Q2 on a year-over-year basis and believes this may prove conservative. Kessler further noted that, although user growth expectations have been lowered, Pandora's CEO indicated the company is building momentum on this front during the Q1 earnings conference call.

  • Monetization gains: Kessler expects "material increases" in ad revenue driven by "increasing ad loads, shifts to local/auto advertising, and newer ad formats." Specifically, Kessler expects RPMs (revenue per thousand hours) to increase to ~$40 in 2014 ~$49 in 2015 and more than $90 long-term.
  • Margins: Kessler believes ad revenue monetization will outpace cost growth and will drive an increase in non-GAAP operating margins from zero percent to five percent in 2013, and as much as 30 percent long-term.

Possibly reacting to this upgrade, shares of Pandora were trading up approximately three percent at last check.

Latest Ratings for P

Apr 2018JP MorganMaintainsNeutralNeutral
Mar 2018Raymond JamesUpgradesMarket PerformStrong Buy
Feb 2018Credit SuisseMaintainsNeutralNeutral

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Posted-In: Aaron Kessler Raymond JamesAnalyst Color Upgrades Analyst Ratings


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