NEW YORK (TheStreet) -- PandoraMedia (P) stock is up by 1.03% to $13.20 in pre-market trading on Wednesday, ahead of a decision by the Copyright Royalty Board that will determine the internet radio company's rates for the next five years.
The U.S. board is expected to make its decision after the market close on Wednesday. Pandora will hold a conference call at 4:30 ET after the decision, the company said in a statement on Tuesday.
Analysts expect a rate increase of 8% year-over-year, which would bring rates to 15 cents per 100 songs, according to JMP Securities.
A rate increase of 1 cent per 100 songs would impact Pandora's 2016 EBITDA by about $20 million, JMP Securities said in an analyst note on Wednesday.
Additionally, Pandora signed a licensing agreement on Tuesday with Warner/Chappell Music, Warner Music Group's publishing company, which caused shares to surge. The deal is part of Pandora's efforts to compete with other streaming services such as Spotify.
"Following the outcome of the rate-setting process, we believe Pandora is well positioned to negotiate direct deals with major labels to expand globally and launch an on-demand subscription service to compete with Spotify and Apple (AAPL)," JMP Securities said.
Separately, 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. 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 some concerns, 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 generally disappointing historical performance in the stock itself.
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 4143.4% when compared to the same quarter one year ago, falling from -$2.03 million to -$85.93 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3900.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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. This year, the market expects an improvement in earnings ($0.11 versus -$0.15).
- 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.
- The gross profit margin for PANDORA MEDIA INC is rather high; currently it is at 53.47%. 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 -27.58% is in-line with the industry average.
- You can view the full analysis from the report here: P