Pandora (P) Bear Says He May Upgrade Stock Below $23/sh

Albert Fried & Company maintained an Underweight rating on Pandora (NYSE: P) with a price target of $23.00. Analyst Rich Tullo said he would likely upgrade the stock to Market Perform if it declines below $23 post-earnings. A post-earning rally would be viewed as an opportunities to exit positions.

"As contrarians, we think Pandora Shares should bounce on the 1Q14E earning print as the shares are down about 35% from the 52 week high or $40.44," said Tullo. "We will likely upgrade Pandora shares to market perform on price valuation should Pandora shares out strip our $23 price target however, should Pandora shares bounce we would use earnings strength as an opportunity to exit."

"We think even a 4th grader can see the risk to the 52 week low ($12.76) is greater then the gains to the 52 week high ($40.44) or 49% downside versus 36% upside. We also note that Pandora has 8% content cost escalations and is hiring sales marketers thus operating leverage works against earnings and investors.One concern is Pandora plans to suspend monthly analytics reports. We think less transparency adds to share risk. In our view suspending transparency is a sign that growth is slowing as companies (such as NYT and MEG (NC)) which suspended monthly media reports and posted revenue declines following the transparency withdrawal. We also note the new subscription rate increase also suggests that organic growth from listening hours and adding users could be flattening," he added.

For an analyst ratings summary and ratings history on Pandora click here. For more ratings news on Pandora click here.

Shares of Pandora closed at $26.19 yesterday.

You May Also Be Interested In

• Visa (V) stock rises as Q2 earnings, revenue come ahead of estimates
• Tesla touts acceleration of new models, but Q1 results fall short of estimates
• European stocks rise; Tesla earnings boost global sentiment