Yesterday evening at live event, Pandora Media Inc (NYSE:P) unveiled its Premium feature for $9.99 per month as an accessible offering to its consumers, as the company combines its “world class” algorithm along with user flexibility. In reaction and on the heels of “heightened M&A chatter,” Canaccord analyst Michael Graham is revisiting the company’s fundamental progress and reiterates a Buy rating on shares of P with an $18 price target, which represents a 31% increase from current levels.
The analyst opines, “We also refresh our historical ad load survey to check in on the state of Pandora’s ad business. We find a mix of indicators, including higher audio ad load with slightly lower local mix, but with significant progress in display sell-through. We also update our thinking on what it will take for Pandora’s ad business to achieve $80 RPMs in the coming years.”
“In general, we continue to expect in-line Q4 results and appropriately conservative initial 2017 guidance, followed by several quarters of better-than-expected subscriber conversion for Pandora Premium. We think this will be positive for the business and stock beginning next year,” Graham concludes, optimistic on the company’s long-term growth prospects with hopes ad RPM growth will re-vamp and build.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Michael Graham is ranked #173 out of 4,262 analysts. Graham has a 54% success rate and garners 10.3% in his annual returns. When recommending P, Graham earns 12.2% in average profits on the stock.
TipRanks analytics indicate P as a Buy. Out of 21 analysts polled in the last 3 months by TipRanks, 10 are bullish on Pandora stock, 8 remain sidelined, and 3 are bearish on the stock. With a return potential of 6%, the stock’s consensus target price stands at $14.61.