Market Overview

Analyst Day Was Far From Having Opened Pandora's Box


Pandora Media, Inc. (NYSE: P) hosted the first analyst day since its IPO. During the event, the company detailed its plans to capture share of the potential $150 billion digital and radio advertising market. Pandora highlighted its goals to drive listenership and improve monetization.

Piper Jaffray analysts maintained an Overweight rating and a$23 price target. In a report published Friday, the analysts said, "We see monetization likely being driven by better local sales efforts, increased use of data, better measurement and an emerging programmatic strategy." The analysts expressed optimism related to the stock and said the company "remains well positioned to gain share in the broader radio market."

"Against a backdrop of negative investor/stock sentiment, we believe Pandora delivered an informative, encouraging, and well received Investor Day," said SunTrust Robinson Humphrey analysts, while adding that they were "impressed with the extended leadership team on display." The analysts write, "Management is clearly intensifying its focus on unlocking the value of that [monetizing] data across marketing (using proprietary data to drive direct response and brand across owned, earned, paid channels), ad sales (mobile programmatic initiatives are nascent but will improve targeting and open up more ad buyers), and industry/artist relations." SunTrust has a Buy rating.

Wedbush Morgan analysts maintained an Outperform rating and a$27 price target. "The $23 billion domestic digital advertising market is expected to grow to $33 billion by 2018, with the $70 billion worldwide market growing to $105 billion in 2018. Pandora's share of overall digital and radio spending could expand even further as ad spend shifts to Internet radio," the analysts said. "With increased ad inventory, a $1.4 billion local advertising revenue opportunity, and the capability to increase both sell-through and pricing of ads, we believe Pandora's revenue growth opportunity is significant," the analysts added.

Pandora is a "unique property with sustainable scale in its user base and continued growth opportunities in further development of its sales force, expansion into programmatic advertising, and native auto integration," wrote Pacific Crest Securities analysts in a report published Friday. "We have increased confidence that the increased spending levels in 2015 represent investments that will generate a positive return, as opposed to deteriorating fundamentals in the business," the analysts added, while reiterating an Outperform rating.

Oppenheimer analysts said that they found Pandora's Analyst Day meeting as "uneventful," since the main driver of the company's stock "will be the outcome of the CRB proceedings." The analysts maintained a Maintain Outperform rating, citing "favorable CRB outcome and long-term revenue upside to platform."

"…through its in-development Artist Marketing Platform (AMP), Pandora is beginning to mine its vast trove of listening behavior data to help artists engage with their fans and drive other revenue sources (today demonstrating case studies where AMP help drive significant uplift in concert ticket and recorded music sales).This type of constructive engagement with artists, in our view, could potentially (1) unlock value(and potentially revenue) from P's data and (2) improve artists' perception of Pandora's value-add in the ecosystem," wrote Morgan Stanley analysts. "The initiative is still in early stages and unlikely to materially influence how the record labels (via SoundExchange) have positioned themselves against Pandora in the upcoming CRB rate setting process," the analysts commented. Morgan Stanley has an Equal-Weight rating on the stock.

JMP Securities analysts maintained a Market Perform rating following the company's analyst day. "Our key takeaways include: 1) user growth and engagement efforts continue; 2) the mix shift to local markets remains a significant monetization opportunity; 3) ad products are delivering relatively strong ROI; 4) a minimal update on Webcasting IV proceedings; and 5) the 2015 financial outlook remains unchanged," the analysts wrote.

Latest Ratings for P

Nov 2018Canaccord GenuityDowngradesBuyHold
Oct 2018Goldman SachsDowngradesBuyNeutral
Oct 2018BMO CapitalDowngradesOutperformMarket Perform

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Posted-In: JMP Securities Morgan Stanley Oppenheimer Pacific Crest Securities Piper JaffrayAnalyst Color Reiteration Analyst Ratings

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