Are you grooving to the greatest hits on Pandora Media Inc (NYSE:P)? Well, not all analysts are snapping their fingers to Pandora’s latest tune.
Pandora in the News
If you’ve been streaming music on Pandora Media Inc (NYSE:P) this week, you might have heard the company’s latest ads on “Promoted Stations”. Companies such as Taco Bell and Skechers USA Inc (NYSE:SKX) are just a few of the brands taking advantage of promoting their own music stations. Because Pandora Media Inc (NYSE:P) makes 80% of its revenue from advertising, they are hoping their newest advertising experiment will pay off.
In addition to these new company-promoted stations, Pandora Media Inc (NYSE:P) just released its April audience metrics. The report revealed a 30% increase year-over-year in listening hours of 1.70 billion hours, as well as 76.0 million users, an increase of 8%.
What Are The Analysts Saying?
Based on the latest metrics, not everyone is whistling a happy tune. Albert Fried & Company analyst Richard Tullo, maintained his SELL rating, with a price target of $20.00. Richard argued, “MAU’s are still bouncing between 75 and 76 million and market share is still around 9%. While we think these numbers are fine when compared to terrestrial radio; our view is Pandora’s flat usage growth is not robust enough to support a mo mo growth story and valuation.” Richard believes that Pandora is a great application, however “the market assigned too high a value for a company with limited earnings growth potential owing to content costs.” Richard is ranked 2275 out of 3054 analysts, with a -1.4% average return over S&P-500 and a 49% success rate of recommendations.
However, there are still analysts who are pleased with the latest metrics, including Wells Fargo analyst Peter Stabler. Peter maintained his BUY rating saying, “April results indicate possible upside to our 4.83b hours estimate for Q2, as we expected lower sequential user growth. Though bears suggested Q1 2014 advertising growth was disappointing, we believe Pandora Media Inc (NYSE:P) is making the correct choice in not pursuing short-term boosts that could come with accelerating ad load growth against high demand demographics.” Even though Pandora is up against many competitors, Peter noted, “In Pandora we see a formidable challenger to terrestrial radio, and a clear first-mover advantage.” Peter has an 80% success rate recommending Pandora, helping him earn the number 55 spot out of 3054 analysts with a +6.4% average return over S&P-500 and a 74% success rate of recommendations.
Conclusion
Pandora Media Inc (NYSE:P) is a pioneer in the radio streaming industry, and while its latest listener metrics may be nothing to jump up and down about, is it enough to keep the stock rising?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]
