Market Overview

Wells Fargo's Take On Pandora's Spotify Competitor

Wells Fargo's Take On Pandora's Spotify Competitor

Pandora Media Inc (NYSE: P), once a pioneer and early mover in the online streaming music space, has seen its competitive positioning suffer at the hands of peers that offered an on-demand music streaming service.

Platforms such as Spotify offer consumers the ability to listen to what they want, when they want — as opposed to Pandora's radio-like format that doesn't offer consumers the same freedom. However, Pandora has now revealed Pandora Premium, which is a brand new service that offers clients access to millions of songs on-demand in an ad-free format that also offers the ability to save music to be listened to offline.

According to the Verge, Pandora's Premium stands out against Spotify and other providers as it allows users to automatically add similar songs to a playlist and boasts a personalized search feature based on the listening history.

But, is this enough to satisfy investors who have seen the stock fall from near $40 per share in 2014 to trade as low as $7.10 per share this year?

Wells Fargo: Compelling Features, Unclear Outcome

Peter Stabler of Wells Fargo commented in a research report on Wednesday that Pandora boasts a large pool of user data and could build the most personalized on-demand product in the market.

The analyst added that Pandora's new platform is compelling and should offer several distinct advantages over the competing platforms. As such, it should be "received very favorably" by consumers, and Pandora could see a significant amount of conversions of users that subscribe to Pandora's free platform.

However, Stabler cautioned that it is less clear whether the new platform is attractive enough to convert users from competitive platforms.

Stabler maintains an Outperform rating on Pandora's stock with a valuation range of $12 to $14 per share, which reflects a 1.5x EV-to-sales multiple on a 2018E revenue estimate of $2.33 billion.

At last check, Pandora shares were up 1.16 percent at $13.94.

Latest Ratings for P

Nov 2018DowngradesBuyHold
Oct 2018DowngradesBuyNeutral
Oct 2018DowngradesOutperformMarket Perform

View More Analyst Ratings for P
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Reiteration Analyst Ratings Movers Tech Media Best of Benzinga


Related Articles (P)

View Comments and Join the Discussion!

Stocks Hitting 52-Week Lows

Best Buy's Market Share Gains Likely To Continue