Analysts Weigh In on Two Internet Stocks: Yahoo! Inc. (YHOO), Pandora Media Inc (P)

Analysts at Piper Jaffray and FBR Capital weigh in on the online media giant Yahoo! Inc. (NASDAQ:YHOO) and online radio giant Pandora Media Inc (NYSE:P). The analysts reflect on Yahoo’s core assets sale, and Pandora’s convertible senior notes offering.

Yahoo! Inc.

Yesterday, Piper Jaffray analyst Gene Munster reiterated an Overweight rating on shares of Yahoo, with a price target of $39, following the news that Yahoo’s board will explore a sale of the core assets of the company.

Munster commented, “WSJ report noted that private equity could be the most likely path for a sale of Yahoo!. We agree as it seems unlikely that companies like Google and Facebook would be interested in Yahoo!’s assets at this point. We believe that the premium multiples paid by buyers like the aforementioned are unlikely to come from a private equity company, thus do not expect significant upside from the 8x EBITDA multiple mentioned above.”

The analyst concluded, “The news has had a positive impact on the stock price, but we believe the reason to own YHOO is still for the potential of the tax free Alibaba spin. We believe the sale of core Yahoo! could have a $3 positive impact for shares of YHOO compared to the $12 positive impact of a tax-free Alibaba spin. We maintain our Overweight rating and continue to expect an Alibaba resolution early next year.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a total average return of 24.5% and a 70.2% success rate. Munster has a 2% average return when recommending YHOO, and is ranked #1 out of 3642 analysts.

Out of the 38 analysts polled by TipRanks, 21 rate Yahoo stock a Buy, while 17 rate the stock a Hold. With a return potential of 26%, the stock’s consensus target price stands at $44.30.

Pandora Media Inc

Today, FBR Capital analyst Barton Crockett reiterated an Underperform rating on shares of Pandora Media, with a price target of $10, after the company announced its intention to offer $300 million aggregate principal amount of convertible senior notes due in 2020.

Crockett noted, “Pandora’s stance is that it believes in the merits of its CRB rate proposal. But by raising money now, we think Pandora appears to be acknowledging some risk that the decision may not go its way, something that we also see as implicit in Pandora’s acquisitions of Rdio and Ticketfly. While these are potentially interesting new capabilities, they also provide business model diversification that could be helpful in a negative CRB scenario. Our cautious stance on Pandora is based to a large degree on our caution about the likely CRB outcome. Pandora’s actions suggest it sees at least some merit in our concerns.”

“This offering is very consistent with our view that after the recent acquisition spree, Pandora would likely need to raise capital, perhaps to fund up-front minimums as part of a global private deal with labels after the CRB decision,” the analyst concluded.

According to, analyst Barton Crockett has a total average return of 11.2% and a 62.0% success rate. Crockett has a 4.4% average return when recommending P, and is ranked #278 out of 3642 analysts.



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