Raymond James analyst Aaron Kessler maintains market perform ratings for Pandora Media Inc (NYSE:P) as the company reveals December audience metrics and automotive advertising platform.

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Pandora launches ads in cars

Pandora Media Inc (NYSE:P) announced today that it will begin rolling out in-car advertising this month. Given that nearly half of radio listening occurs in the car (though only four million Pandora users have integrated with in-car solutions today), this should represent a significant opportunity for Pandora longer term. Pandora Media Inc (NYSE:P) has partnered with 23 major auto brands and eight after-market manufacturers to date and will begin implementation with national brands including BP, Ford, State Farm, and Taco Bell.

RJ’s Recommendation: Pandora Media Inc (NYSE:P) announced December audience metrics, as well as the launch of its automotive advertising platform. The December audience data is generally in line with analysts’ estimates, though they believe the solid December listener user growth is a positive given the increased competition in the market (i.e., Apple, Spotify). Analysts at Raymond James remain positive on Pandora’s fundamental trends, particularly its ability to drive higher ad pricing and sell-through rates as it penetrates the local radio ad market. That said, at current levels, they believe shares are largely pricing in the positive outlook and believe the risk/reward is more balanced at current levels.

Pandora December Metrics

Pandora Media Inc (NYSE:P) released December audience metrics this morning, indicating that total listener hours for December were 1.58 billion, a 13% increase y/y (vs. an 18% increase in November/December). For the full quarter, listener hours of 4.54 million increased 16% y/y (slightly below analysts’ 18% y/y estimate and in line with last quarter’s 16% y/y increase). In addition, Pandora Media Inc (NYSE:P) announced its share of U.S. radio listening increased to 8.6% vs. 7.58% a year ago and up from 8.44% last month. Active listeners of 76.2 million increased ~13.5% y/y and increased 3.8 million month/month. While lower than the 4.7 million users added last December, analysts believe the accelerating trend vs. the previous two months is a positive especially given the increasing competition from Apple Inc. (NASDAQ:AAPL) and Spotify.