Oppenheimer Maintains Bullish Views and $25 Price Target on Pandora (P) as Stock Prices Discount Bearish CRB Outcome

Oppenheimer maintained an Outperform rating and $25.00 price target on Pandora (NYSE: P) as stock prices discount bearish CRB outcome. Analyst Jason Helfstein said that, as a result, he sees current levels as an attractive entry point.

Helfstein commented, "While recent weakness has been caused by concerns over competition from newlylaunched Apple Music, we believe the current stock price is now discounting a more bearish CRB outcome. As a result, we see the current level as an attractive entry point. Based on our analysis, the current stock price is discounting a 35-40% performance royalty floor, vs. the current 25%. As discussed in our 10/8/14 report “CRB Rates Analysis Suggests 2016 Street EBITDA Estimates Too Low,” we believe 25-30% royalty rates are the most likely outcome. Meanwhile, while Apple Music may have a short-term impact on 2H listener hours, we see limited revenue impact as P continues to have unsold air time, while it will likely benefit gross margins from lower royalty payments. Furthermore, we note that Pandora is the US category leader in streaming music, with time spent 7x higher than Spotify, according to June comScore data. Lastly, we believe local advertising, programmatic ads and international expansion represent significant long-term growth drivers. Pandora reports 2Q results after the close on Thursday, July 23. Maintain Outperform and $25 PT."

For an analyst ratings summary and ratings history on Pandora click here. For more ratings news on Pandora click here.

Shares of Pandora closed at $14.04 yesterday.

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