Goldman analyst Heath P. Terry upgraded the stock to "buy" from "neutral," raising his 12 month price target 50% from $18 to $27. Terry cites the Internet radio company's "three quarters of accelerating mobile ad RPM and subscription revenue growth" and competitive value from its large existing user base.
In May 2013, Pandora's advertising revenue exceeded its content acquisition cost growth for the first time; Terry writes that such growth will continue. Its subscription revenue growth has accelerated for three consecutive quarters, which Terry attributes to its "distribution ecosystem," which includes autos, Google Play, and connected televisions. Finally, Pandora's share of mobile Internet radio minutes has remained roughly the same--about 80%--despite the introduction of multiple well-hyped competitors like iTunes Radio and Spotify.
Pandora's 2014 second quarter earnings will be released released on August 22 after the bell. Terry expects those results will beat both top- and bottom-line expectations.Analysts polled by Thomson Reuters expect Pandora to earn 2 cents per share on $156.33 million in revenue. In its first quarter earnings (released May 2013), the company raised revenue 58% year-over-year to $128.5 million, beating analysts' expectation of $123.96 million and matching the expected loss of 10 cents per share.
Shares of Time Warner Cable (TWC ) dropped slightly, falling 0.43% to $109.74 amid its continuing disputes with CBS (CBS). Since August 2, CBS stations and Showtime have been unavailable to subscribers in New York, Los Angeles, Dallas, and elsewhere due to contract disputes between the two companies. With the September 8 opening weekend of the NFL season fast approaching, Time Warner may lose leverage in the negotiations because of anticipated outrage from Time Warner missing the games, as CBS holds the broadcast rights to AFC games.
Alliance Fiber Optics (AFOP ) shares shot up 8.40% to $31.35 after it announced yesterday that it would conduct a two-for-one stock split. The stock split of the Sunnyvale, California-based manufacturer of fiber optics components will take place in September. Shareholders of record as of the close of business on August 30 will receive one additional common stock for each share they own, while shares issued pursuant to the split will be issued on September 16. CEO Peter Chang said in the press release, "Today's stock split demonstrates our Company's commitment to building value for our shareholders and our confidence in the fundamentals and growth potential of both our business and the optical communication industry." He added that the split would "further improve our liquidity and to make our shares more accessible to institutional and individual shareholders." -- Written by Laura Berman in New York Follow @LauraBermanTST