The firm set a $34 price target on the shares.
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Pandora is up 4.5% to $26.40 in early market trading today.
The firm expects the online radio company to remain the top dog in the sector due to a superior product and new in-automobile opportunities for growth despite increased competition.
"We fully expect increased competition to result in moderating usage growth but make the following points: we believe Pandora offers the best user experience per proprietary technologies and platform advantages, thus do not expect users to abandon Pandora as their primary internet radio and our proprietary survey supports this; in-auto presents a real offset to competitive pressure," the firm said.