Pandora Media Inc (NYSE:P) is the direct beneficiary of the rise in mobile advertising revenue, and some see this as a reason to be bullish on it in spite of the challenges seen by bears. Barrington Research analysts think the company represents “an attractive way to play the still-nascent, but very promising” mobile ad market.

Pandora’s potential in mobile advertising

In a report dated July 29, 2014, analysts James Goss and Jeff Houston said Pandora Media is fourth in mobile ad share, following only Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR). They say mobile advertising revenue alone is rapidly gaining a share of domestic spend ahead of traditional advertising in magazines and newspapers and on the radio. They add that along with Internet advertising, mobile advertising is surpassing every other type of advertising except cable and broadcasting.

They report that Pandora specifically has increased its usage metrics to a level that positions it well to take advantage of the opportunity in mobile advertising. In the most recently completed quarter, the Internet radio provider reported $166 million in mobile ad dollars, which was 76% of the total $219 million in sales for the quarter.

Local advertising also presents opportunities to Pandora

Another place in which they see a lot of potential for Pandora Media is local advertising. The Barrington team notes that Pandora management has continued to focus on radio ad spending. The company has been rapidly improving its local position by increasing its share of radio listening in important market and also increasing its local ad sale staff in those areas. Pandora has apparently been hiring away the markets’ top ad salespeople from local radio stations.

Currently the company has focused on about 37 local markets and how sees 20% of its ad revenue from these markets. The analysts note that there is some pressure on profitability even though sales expectations are higher because Pandora has been investing in marketing and product development.

Pandora still rated Outperform

The Barrington team reiterated their Outperform rating and $41 per share price target on Pandora Media. The streaming Internet radio provider saw a very strong stock performance last year, although now it’s a bit down year to date. Also the company has fallen behind overall market measures, thus reducing the downside risk, according to the analysts.