The firm has established a $16 price target on the Oakland, CA-based music streaming service.
Axiom had been neutral on the stock for years and "skeptical" of the company to navigate an increasingly competitive environment, but recently altered their view.
"We now believe that there is a greater probability of Pandora building a successful and differentiated on-demand service while increasing the value of the core," Axiom wrote in a note cited by CNBC.com, "Users' appetite for paying for music streaming is increasing and Pandora is poised to capture share cost effectively."
The firm also pointed to Pandora's profitable core business, supported by a steady number of active users and the company's appeal as an acquisition target.
Users are also more open to the Internet radio service, Axiom noted.
"This is important because this likely means that the on-going negotiations with the major labels for an on-demand service have a good chance of success," the firm added.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.
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.
Recently, 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.
You can view the full analysis from the report here: P