Pandora (P) Stock Downgraded at Pacific Crest
NEW YORK (TheStreet) -- Shares of Pandora (P) closed up by 2.33% to $12.28 on Friday, despite Pacific Crest downgrading the stock to "underweight" from "sector weight" this morning.
Pacific Crest analysts noted that the stock's operating leverage has deteriorated and that there's little likelihood that the company will produce meaningful profits in on-demand.
Liberty Media (LMCA) is reportedly in talks to purchase the Oakland, CA-based music streaming service, but Pacific Crest doesn't believe it's likely to happen due to Pandora's current valuation.
"Pandora is burning a significant amount of cash and the challenges to its business model do not appear changeable through scale or a change of ownership," the firm continued in an analyst note.
The firm's 12-month fair value on the stock is $6, less than half today's price, Barron's reports.
Additionally, Pandora reported worse-than-expected second quarter results after yesterday's market close, posting earnings of 12 cents per share on revenue of $343 million. Analysts were expecting earnings of 16 cents per share on revenue of $351 million.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate PANDORA MEDIA INC as a Sell with a ratings score of D. This is driven by a number of negative factors, 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, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
You can view the full analysis from the report here: P
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