Analysts are bombarding Pandora Media with bearish reports, downgrades and price target cuts
Pandora Media released its latest earnings report last night, and the company totally bombed on sales. As a result, shares plunged, falling as much as 17.06% to $15.27 per share during regular trading hours today.
Analysts from at least three firms have downgraded the radio streaming provider in the wake of the earnings disappointment. A few other firms have maintained their previous ratings but slashed their price targets for the company.
Pandora Media disappoints—big time
Pandora posted adjusted earnings of 18 cents per share on $268 million in revenue, a 33% year over year increase. Analysts had been hoping for earnings of 18 cents per share and $276.5 million in revenue. The internet radio company ended the year with 81.5 million active listeners, an increase of 5 million.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
Wall Street was also disappointed by Pandora’s guidance. Management said they expect between $220 million and $225 million in revenue for the current quarter. That’s significantly lower than the consensus estimate of $243 million. They’re expecting full year revenue to be between $1.15 billion and $1.17 billion, again missing the consensus estimate of $1.21 billion, reports Chris Ciaccia on The Street.
Pandora Media downgraded by a major trio
Among the firms that downgraded Pandora after last night’s earnings report are Raymond James and Wells Fargo, both of which downgraded Pandora from Outperform to Market Perform. Analysts at B. Riley also downgraded the company, moving their rating from Buy to Neutral and cutting their price target from $38 to $12.50 per share.
Karee Venema of Schaeffer’s Invest Research reports that CRT Capital cut its price target for Pandora from $26 to $16 per share. The firm has a Fair Value rating on Pandora Media.
More downgrades could be coming for Pandora
Pandora Media will probably see even more bearish calls in the coming weeks. One analyst who is considering downgrading the company is Andy Hargreaves of Pacific Crest Securities. He currently has an Outperform rating, although he slashed his price target from $35 to $20.
He still sees Pandora Media as a “unique asset that is changing radio advertising.” However, he added that this week’s earnings report has “significantly” lowered his “confidence in the leverage inherent to the business.” If he doesn’t become more confident on Pandora’s ability to see returns on its spending this year, he said he will probably downgrade the company’s stock.
Analyst Stephen Ju of Credit Suisse also lowered his price target on Pandora Media, bumping it down from $24 to $21 per share. He believes Pandora disappointed in sales because of holiday weakness in ad spend in the retail, consumer electronics and telco sectors.
Ju also said that even though Pandora’s guidance was weak, he thinks it may end up being conservative. He continues to rate the company at Neutral.
A little bit less bearish on Pandora
Michael Graham of Canaccord Genuity was a little less harsh on Pandora in his report. He currently has a Buy rating and $28 per share price target on the internet radio broadcasting company. He noted the same three areas of weakness Ju did—consumer electronics, retail and telco—and said he thinks this is only temporary.
However, he also thinks the company did exceptionally well in listener growth, pointing out that it appears the growth was loaded into the back end of the quarter because of the slower growth in hours. He still likes Pandora and thinks it will grow significantly, although he believes Wall Street will need to see more clarity on the company’s content costs. The analyst does think that eventually though, the current share price “will ultimately seem like a bargain.”