Pandora Meda Inc (P) Will Continue To Grow, But How?

Pandora Meda Inc (P) Will Continue To Grow, But How?
By w:Pandora [Public domain], <a href="">via Wikimedia Commons</a>

Pandora Media Inc (NYSE:P) shares fell more than 16% after the company reported its fiscal first quarter results. The Internet radio company said its revenues advanced 54% YoY to $180.1 million, beating the Wall Street consensus of $174.9 million. Pandora posted a net loss of 13 cents per share, while analysts were expecting the company to lose 14 cents a share during the quarter.

Pandora raises its full year guidance

Pandora Media Inc (NYSE:P)’s mobile revenue soared 59% to $103.1 million. March listener hours rose 14% YoY to 1.71 billion. It shows that users tune in more often and are listening for more hours. Its market share in the U.S. radio listening has increased from 8.05% to 9.11%. During Q1, the number of active listeners increased by 8.3% YoY to 75.3 million, but it was flat on a QoQ basis.

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Pandora Media Inc (NYSE:P) raised its full year 2014 revenue and earnings guidance. The company now expects its full year revenues to come in the range of $880-$900 million, compared to the analysts’ estimate of $892.3 million. Barrington Research analysts Jeff Houston and James C. Goss have also raised their revenue estimate from $890 million to $899 million. The Oakland, California-based company forecasts full year adjusted EPS of 14-18 cents, compared to the previous guidance of 13-17 cents and Wall Street consensus of 16 cents. Pandora However, investors were disappointed by Pandora Media Inc (NYSE:P)’s current quarter guidance, which missed the consensus estimate. The company expects its Q2 revenues to grow 31-34% YoY to $213-$218 million, slightly less than the Street’s estimate of $219.3 million. Pandora guided its Q2 adjusted earnings to come at 0-3 cents, well below the Wall Street consensus of 5 cents.

Pandora has significant advantages over broadcast radio

Despite lower than expected Q2 guidance, Barrington Research analysts believe that Pandora Media Inc (NYSE:P) will maintain its robust growth in the long-run. The research firm has an Outperform rating on the stock with $41 price target. Houston and Goss said that Pandora will improve mobile monetization while maintaining robust growth in advertising and subscription revenue, listener hours and active users. The company will achieve this with differentiated, disruptive technology.

In 2013, about 33% of new domestic vehicles had Pandora Media Inc (NYSE:P) integration. And its Internet radio service is available on about 1,000 electronic devices, says Barrington Research. What’s more, analysts expect the company to start taking share of the U.S. broadcast radio market, while maintaining share of the mobile advertising and online ads markets.

Pandora Media Inc (NYSE:P) has significant advantages over broadcast radio. Its recent integration with the ad buying platforms such as STRATA, Telmar, and Mediaocean should strengthen the company’s position. Pandora has more reach than any individual station in the U.S. market. It has better targeting capabilities based on age, sex, location, music taste, devices used and time of the day. The company offers superior user experience with fewer interruptions and personalized songs.

Pandora Media Inc (NYSE:P) shares soared 5.17% to $24.01 at 2:12 PM EDT on Tuesday.

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