Market Overview

Pandora Investors: This Isn't The Deal You Were Waiting For

Share:
Pandora Investors: This Isn't The Deal You Were Waiting For

Pandora Media Inc (NYSE: P) announced in early May that management is exploring strategic alternatives, including a sale of itself. The company followed through on its pledge but take action and improve its business — although the outcome wasn't as many had hoped for.

Pandora's announcement last week of a strategic investment from Sirius XM Holdings Inc. (NASDAQ: SIRI) and a sale of Ticketfly prompted Oppenheimer's Jason Helfstein to downgrade the stock from Outperform to Perform while removing a prior $14 price target.

SiriusXM's strategic investment will help the streaming music provider refocus on the core advertising strategy, Helfstein argued. But there will be a transition period in which Pandora's management will need to:

    1. Finalize and introduce its digital audio ad-tech tools.
    2. Hire more experienced operating managers.
    3. Improve integration in the car.

Also, SiriusXM's strategic investment "obviously ends any takeout speculation" which creates limited upside in the near-term. Over the longer term, Pandora is on the right path and could even act as a distribution channel for Sirius' exclusive content to monetize non-paying users.

Check out Jason Helfstein's track record.

Bank Of America Reaffirms At Buy

Bank of America's Mark Kelley reaffirms a Buy rating and $12 price target on Pandora's stock following the SiriusXM announcement. Similar to Helfstein's thesis, the deal does end M&A speculation (for the time being) but this is could be seen as a positive.

Pandora now boasts a better balance sheet which it can use to invest in its on-demand platform, the analyst added. Also, the sale of Ticketfly was a necessary move and better positions Pandora to focus on its core product.

Related Links:

Keith Meister's Bullish Stance On Pandora 2.0

Statistics Show Music Streaming Is Now Too Big To Fail...For The Music Industry

Posted-In: Analyst Color Long Ideas News Downgrades Reiteration Asset Sales M&A Analyst Ratings Best of Benzinga

 

Related Articles (SIRI + P)

View Comments and Join the Discussion!