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Pandora Has A Long Playlist Of Transitional Issues To Get Through

Pandora Has A Long Playlist Of Transitional Issues To Get Through
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Pandora Media Inc (NYSE: P)'s earnings release Monday initially impressed investors with a better-than-expected report, but reading between the lines shows many transitional issues that need to be addressed, Barrington Research's James Goss argued in a research report while maintaining a Market Perform rating with no assigned price target.

Pandora continues to experience management changeovers, most recently with the departure of the company's co-founder Tim Westergren along with President Mike Herring and chief marketing officer Nick Bartle, Goss noted. The current chief financial officer Naveen Chopora is acting as CEO for now and is one of a few candidates up for consideration to serve as permanent CEO.


Meanwhile, the sale of Ticketfly does eliminate a "diversification that initially seemed to make sense" but ended up being costly and less beneficial to Pandora's overall business as initially assumed, the analyst continued. Also, the bankruptcy of a large Ticketfly client has added "another costly element."

Also, Pandora's decision to end its operations in Australia and New Zealand is likely now viewed as a "distraction that was not sufficiently impactful, but not a reason to avoid consideration of international diversification in the future."

Sirius XM Investment

There are still several questions surrounding Sirius XM Holdings Inc. (NASDAQ: SIRI)'s $480 million strategic investment, Goss added. Specifically, some of the unknowns include a potential impact on the mix of advertising and subscription services and potential synergies created through a join at sales effort.

Nevertheless, the Sirius XM investment does provide "greater confidence of reduced downside risk" to Pandora's stock moving forward — but by no means is it a "magic bullet."

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Latest Ratings for P

May 2018Credit SuisseMaintainsNeutralNeutral
May 2018B. Riley FBRUpgradesNeutralBuy
May 2018Canaccord GenuityMaintainsBuyBuy

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