In a research report released today, RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating on shares of Pandora Media Inc (NYSE:P) with a price target of $13, after the internet radio company announced that it has signed direct sound recording licensing deals with Universal Music Group, Sony Music, and over 40 independent labels.
Mahaney wrote, “These partnerships are a key step toward allowing Pandora to launch its new on-demand subscription product in the U.S., which management now expects to launch by the end of the year. We’d note that these label agreements only apply to the U.S. and that negotiations with Warner (3rd largest label and missing from today’s announcements) are still ongoing, though management noted that the conversations have been constructive.”
The analyst concluded, “Pandora continues to improve its monetization, engagement levels (Hours per User), and is gaining share vs. total U.S. Radio Hours (now over 10%), has moved past CRB and is looking to new products (on-demand) ahead. The offsetting negative, however, is that Pandora’s User base growth continues to languish. So P is undergoing a dramatic growth investment phase (Marketing & Product Development) to protect and grow its core ad-supported music streaming business while spending $120MM to develop an on-demand music service.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a yearly average return of 20.6% and a 67% success rate. Mahaney has a -19.6% average return when recommending P, and is ranked #5 out of 4143 analysts.
Out of the 35 analysts polled by TipRanks, 20 rate Pandora Media stock a Buy, 14 rate the stock a Hold and 1 recommends a Sell. With a return potential of 18%, the stock’s consensus target price stands at $16.64.