Pandora (P) Estimates, Price Target Raised at Needham & Company Ahead of Q3 Print

November 12, 2013 2:36 PM EST Send to a Friend
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Price: $18.31 +1.55%

Rating Summary:
    23 Buy, 14 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 9 | Down: 10 | New: 35
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Needham & Company analyst Laura Martin reiterated a Buy rating, raised estimates and raised her price target on Pandora (NYSE: P) from $25 to $33 intra-day ahead of Q3 quarterly earnings on Thursday, November 21, 2013 after the close of the market.

Martin explains: "We are raising our target price to $33 (from $25) based on rolling forward our DCF valuation model for revised FY14 and FY15 estimates. We raise our FY14 and FY15 estimates based on actual results through October 2013 coming in higher than our previous estimates. We expect this trend to continue into FY4Q14 and into FY15. For FY14, we expect P to report revenue of $644mm (up 51% y/y and 1% above our previous estimates), and Non-GAAP EPS of $0.03 (up vs a loss of $0.07 in FY13 and no change from our previous estimates)."

The firm's Buy rating is based on the following analytical building blocks:

  • P is investing in salesmen to buy an option on the $14B local radio adverting market. This investment is hurting their reported valuation multiples today, but we expect the potential ROIs on local to be higher than the core business over time.
  • Revenue growth upside is provided by cars, where P generates zero revenue today and has a 5 year lead over competitors.

    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 $27.15 yesterday.


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