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Wall Street, Bob Peck At Odds Over Pandora

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Wall Street, Bob Peck At Odds Over Pandora
  • Shares of Pandora Media Inc (NYSE: P) plunged to a new 52-week low on Friday of $11.50 and is now lower by nearly 45 percent from a year ago.
  • Pandora reported an in-line third quarter, but lowered its full year revenue and EBITDA guidance and also announced a $90 million settlement.
  • Several notable analysts, including Bob Peck, maintained a positive stance.

Pandora Media reported it earned $0.10 per share in the third quarter on revenue of $311.6 million. Analysts were expecting the company to earn $0.10 per share on revenue of $313.0 million.

Pandora issued guidance and expects its fourth-quarter revenue to fall in a range of $325 million to $330 million – short of the $352 million analysts were expecting. Full-year fiscal 2015 sales is now expected to be $1.153 billion to $1.158 billion, also short of the $1.18 billion expected.

The company also confirmed it reached a $90 million settlement for the use of records created before 1972.

Here is a summary of what Wall Street's top analysts were saying following the print.

SunTrust: Positive On Potential Near-Term Catalysts

SunTrust Robinson Humphrey's Bob Peck maintained a Buy rating with a price target lowered to $18 from a previous $25. He noted that Pandora's guidance was "shockingly weak" and implies monetization is "hitting a wall."

Peck suggested that Pandora is now closer to direct deals with labels to expand internationally. The analyst concluded that near-term catalysts (CRB, conservative guidance, direct deals) supports a near-term positive stance.

RBC: Increased Competitive Pressure

Mark Mahaney of RBC Capital Management downgraded Pandora to Sector Perform from Outperform with a price target lowered to $20 from a previous $24. He noted that Pandora's outlook could be "materially impacted" by Apple Music and Spotify.

Mahaney added Pandora's fourth-quarter guidance is "materially" below the Street's estimates and concluded that without a "clear path to robust user and usage growth," the stock is unlikely to fundamentally outperform.

Oppenheimer: Competition And Monetization Weigh On Margins

Jason Helfstein of Oppenheimer downgraded Pandora to Perform from Outperform with no assigned price target.

According to Helfstein, Pandora is facing a "dilemma" between ad load and user satisfaction. He suggested the company must increase listeners versus ad loads, which will "hurt" its fourth quarter and 2016 margins.

Finally, shares are expected to trade in a range of $13 to $18 in the near term, even when assuming a favorable CRB outcome.

Albert Fried: Shares Could Be ‘Dead Money'

Rich Tullo of Albert Fried downgraded Pandora to Underweight from Market Perform with a price target lowered to $11 from a previous $24.

Tullo stated that Pandora's $90 million settlement is a "disaster" and signals the company expects a higher than anticipated CRB ruling. He noted that Apple Music has an inferior platform yet Pandora's subscribers declined.

Tullo stated that under a "best case" scenario shares are "dead money" through 2Q2016 as the CEO "missteps on multiple issues."

Needham: Buy On Weakness

Laura Martin of Needham maintained a Buy rating on Pandora with an unchanged $24 price target.

According to Martin, Pandora is "one of the only companies" under coverage that has closed the mobile monetization gap at 82 percent of revenue from mobile. She added that Pandora's third-quarter listener metrics were impacted by competition, but this is not expected to occur in the fourth quarter and beyond.

The analyst noted that investors should buy on weakness given an international expansion in 2016, upside to revenue expectations, and a favorable CRB decision.

Elsewhere On The Street

  • Analysts at Credit Suisse maintained a Neutral rating on Pandora with a price target lowered to $23 from a previous $24.
  • Analysts at Goldman Sachs maintained a Buy rating on Pandora with a price target lowered to $24 from a previous $25.
  • Analysts at MKM Partners downgraded Pandora to Neutral from Buy with a "fair value estimate" of $14.

Latest Ratings for P

DateFirmActionFromTo
Nov 2018DowngradesBuyHold
Oct 2018DowngradesBuyNeutral
Oct 2018DowngradesOutperformMarket Perform

View More Analyst Ratings for P
View the Latest Analyst Ratings

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