Both, Inc. (NASDAQ:AMZN) and Pandora Media Inc. (NYSE:P) will be reporting earnings tomorrow after market close. Mark Mahaney of RBC Capital weighed in on the two stocks ahead of the game, highlighting his estimates, potential catalysts, and concerns.Mahaney stats, Inc.

Mahaney weighed in on Amazon ahead of the company’s earnings, reiterating an Outperform rating on the stock with a price target of $705. Mahaney estimates the ecommerce giant will post revenue of $24.7 billion and a GAAP loss of ($0.18). Both of these estimates are more conservative than the overall consensus of $24.9 billion and ($0.18), respectively.

Further, the analyst believes that 2015 results and fundamental trends for Amazon will continue to provide an upward bias. He added, “Our $705 PT is based on a SOP (sum-of-parts), valuing Amazon’s three segments (North American Retail, International Retail and Amazon Web Services or AWS) separately on 2017 estimates.”

Along with the target price, the analyst also shared his upside/downside scenario for the company. On the upside, Amazon’s share price could touch $850 due to “higher than expected revenue growth rates over the next two years on stronger than anticipated unit sales growth.” However, on the downside, Amazon’s share price could slide to $500 as a result of “somewhat lower than expected top-line growth over the next two years on weaker than anticipated unit sales growth.”

Mahaney’s investment thesis for the company is based on a number of factors including Amazon’s significant online retail growth, clear market share gains, new opportunities for revenue growth, and a proven track record of the management team. The analyst also touches on the potential risks of intrinsically high valuation, “Media Hole” – transition to digital media, sales tax overhead, and omnipresent competitive risk.

According to TipRanks, Mahaney has rated Amazon 37 times since 2009, earning a 92% success rate recommending the stock with a +34.6% average return per AMZN rating.

As of this writing, out of 31 analysts who have rated Amazon’s stock, 28 have rated it as Buy and 3 have rated it as Hold; none of the analysts have rated the stock as Sell. Based on consensus estimates, the average 12-month price target for the stock is $644.72, an upside of around 12% over current levels.

Pandora Media, Inc.

Ahead of Pandora’s earnings tomorrow, Mahaney reiterated an Outperform rating on the stock with a price target of $24. The analyst is expecting revenue of $314 million, which is in-line with consensus estimates, and non-GAAP EPS of $0.09, which is slightly lower than the general consensus of $0.10.

In terms of key metrics for the company, Mahaney expects total listener hours to come in at 5.5 billion, a 10% increase year-on-year, and 80 million active users, up 4% from the previous year. The analyst is expecting Pandora’s market share to grow as a percentage of the total US listening hours, with year-on-year share growth in Q3 expected at 9.8%. Mahaney expects RPM, or revenue per member, to be $53.08; a 20% year-over-year increase. Content acquisition costs, which have been a source of leverage traditionally, are expected to be 45% of total revenues in Q3, a year-on-year improvement of 180 basis points.

In his report, Mahaney mentions potential catalysts for Pandora including moving local radio ad spending online; significant improvement in licensing cost structure; and growing mobile RPM as well as flattening desktop RPM. However, there are also risks such as the possible continuation of the current licensing cost structure; pressure from competition; and failure to gain ad share from traditional radio.

According to TipRanks, Mahaney has rated Pandora 20 times since 2011, earning a 53% success rate recommending the stock and a +5.4% average return per Pandora rating.

Out of 19 analysts who have recently rated Pandora’s stock on TipRanks, 14 have rated it as Buy, 4 have rated it as Hold, and 1 has rated it as Sell. The average consensus price target for the stock is $24, an upside of nearly 19% over current levels.