Pandora Media Inc (P) Redirects Attention to Fundamentals; Aegis Lowers Price Target


SiriusXM’s $480 million investment into Pandora Media Inc (NYSE:P) obviously ends any takeout speculation. As such, Aegis Capital analyst Victor Anthony lowered his price target for the stock from $15 to $13, while still reiterating a Buy rating. The new price target represents an upside of approximately 72% compared to where the shares last closed,

“With M&A now off the table in the near-term, to our disappointment and to that of many investors, focus now shifts to the fundamentals of Pandora’s business, which now consists of the ad supported service and the two subscription businesses. We readily admit that there are challenges, but we see greenshoots for the businesses, coupled with the discipled management of Liberty Media, the makes the risk-reward to owning the shares at the current depressed share price, compelling,” elaborates the analyst.

Anthony asserts application tracking data proved the number of users for May and June increased compared to those of April, although the analyst predicted otherwise. Looking ahead, Anthony believes the music streaming platform could strengthen ad RPMs figures, and if it succeeds in doing so, then its industry ad dollars and its share of listening time would be more balanced (5% and 11% respectively).

Additionally, the analyst refers to subscribers estimates, and expects 350K on-demand subscribers by the second quarter of 2017, eventually reaching a total of 4M subscribers by 2018. Anthony remains bullish, adding, “We are in the minority camp with our belief that despite stiff competition for on-demand music streaming from Spotify and Apple Music, Pandora has a decent shot at capturing a slice of this expanding market.”

The analyst points out John Malone, Liberty Media Corp’s chairman, will be a great asset for Pandora in terms of return on equity. Anthony even stipulates, “The list of companies that have benefited from full or partial Liberty ownership is too numerous to list here,” and he forecasts Pandora will ultimately be acquired by Liberty/Siri.

Although overall bullish, Anthony still reduces total revenues by for the year 2017 8% and by for 2018 2%, as well as the price target.

According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, five-star analyst Victor Anthony is ranked #166 out of #4574 analysts. Anthony has a 63% success rate and generates an annual yield of 12.9%. However, when recommending NOK, the analyst earns a -32.7% average profit on the stock.

TipRanks analytics show P as a Buy. Based on 17 analysts offering recommendations for this share, 8 issue a Buy, 8 maintain a Hold and 1 recommends a Sell. The 12-month average price target stands at $12.96, making a nearly 71% upside from where the stock is currently trading.