Goldman analysts wrote that the stock could double if the streaming radio giant can double its average advertising total, increase local advertising proportion to 50% and leverage its fixed financial costs. Other analysts had predicted an 8% chance that Pandora could surpass $60, but Goldman reports that the chances are significantly higher than that.
"We believe the mix-shift to local advertising from national advertising as well as the increase in ads per hour are likely to boost revenue far beyond the expected annual listener hour growth of 25% from 2013 to 2016," the report states. "If local advertising rises to 50% of total (from 16%) and the ad load rises to four minutes per hour (from two), 2016 revenue could be 400% higher than in 2013."
The stock had a volume of 7.5 million before noon on Thursday, and its average volume is 8,700,780.
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TheStreet Ratings team rates PANDORA MEDIA INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PANDORA MEDIA INC (P) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 182.8% when compared to the same quarter one year ago, falling from $2.05 million to -$1.70 million.
- PANDORA MEDIA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PANDORA MEDIA INC reported poor results of -$0.23 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.23).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, PANDORA MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 46.70% is the gross profit margin for PANDORA MEDIA INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.94% is in-line with the industry average.
- Net operating cash flow has significantly increased by 569.24% to $4.12 million when compared to the same quarter last year. In addition, PANDORA MEDIA INC has also vastly surpassed the industry average cash flow growth rate of 23.85%.
- You can view the full analysis from the report here: P Ratings Report