It’s a tale of two internet firms this afternoon, as shares of Groupon Inc (NASDAQ:GRPN) are up $0.56, or 25%, and shares of Pandora Media Inc (NYSE:P) are down $1.60, over 17%, following their respective earnings reports. Here’s a quick roundup of today’s brokerage notes on GRPN and P.
Brean Capital analyst Tom Forte reiterated a Buy rating on shares of Groupon, with a $5.00 price target, after the company reported encouraging fourth-quarter results, with total sales of $917.2 million, compared to consensus estimate of $845.9 million and against management’s guidance of $815-$865 million.
Forte commented, “Not surprisingly, we were very encouraged by Groupon’s 4Q15 operating results and the notion that the company appears to be pointed in the right direction. Full-year guidance was also favorable, when considering management raised the range for its adj. EBITDA outlook.”
The analyst continued, “We have long felt that for Groupon’s long-term success it needs to be more than a daily deal provider for local businesses. To that end, we were encouraged by management’s comments that it was aligning its sales force by verticals, such as food & drink and health & beauty, which could both enable the company to deepen its relationships with local merchants to increase its inventory, beyond daily deals, and improve its understanding of its merchants’ businesses by having a more specialized sales force. In particular, in food & drink, it could offer a restaurant daily deals to drive traffic (as needed) and delivery services to drive usage (all of the time). We see this as step forward to the company becoming the long-term success we have long envisioned – the partner to local merchants, offering a suite of services, beyond daily deals.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tom Forte has a yearly average return of -50% and a 3.4% success rate. Forte is ranked #3560 out of 3564 analysts.
Out of the 5 analysts polled by TipRanks (in the past 3 months), 3 rate Groupon stock a Buy, while 2 rate the stock a Hold. With a return potential of 28%, the stock’s consensus target price stands at $3.60.
Pandora Media Inc
On the flip side, RBC Capital analyst Mark Mahaney reiterated a Market Perform rating on shares of Pandora, while slashing the price target to $13 (from $20), after the company reported a fourth-quarter earnings miss, sending shares tumbling 15% as of this writing.
Mahaney commented, “The positives are that Pandora has been improving its monetization, marginally increasing engagement levels (Hours per User), continuing to gain share vs. total U.S. Radio Hours (now @ 10%), and has largely addressed uncertainty re: its core service fees structure. The BIG offsetting negative, however, is that Pandora’s User base has started to decline (likely due to competition from Spotify and Apple Music). So Pandora is undergoing a dramatic growth investment phase to protect and grow its core ad-supported music streaming business WHILE spending $120MM to develop an on-demand music service. Visibility into the success of these investments is very low, tho Pandora does start off with an established brand and 81MM Users.”
According to TipRanks.com, analyst Mark Mahaney has a yearly average return of 14.3% and a 51.1% success rate. Mahaney has a -19.6% average return when recommending P, and is ranked #26 out of 3564 analysts.