Pandora (P) Higher into Q3 Results; Analysts Mixed on Mobile Ad Revenue Outlook

December 4, 2012 11:54 AM EST
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Pandora (NYSE: P) shares are higher on the session Tuesday heading into the company's third-quarter 2013 results.

Expectations peg Pandora profiting 1 cent per share in the period on revenue of $117.16 million. In the same period last year, Pandora reported a loss of 1 cent per share and revs of just $75 million.

Wedbush is taking a positive stance on Pandora into the tape. The firm sees EPS of 3 cents and revs of $121 million, versus Pandora's own guidance calling for flat to 1 cent of profit and revs of $115 million to $118 million.

Overall, Wedbush expects strong CPM results and a larger ad presence stemming from improved political spending. The firm also cites U.S. radio market share gains as a key catalyst. Wedbush averred that Pandora's results have been above consensus views that last few quarters on "continued market share gains and effective cost control."

Looking ahead, Wedbush sees management boosting expectations on a beat. Pandora has typically been conservative when it comes to offering an outlook.

Last Wednesday, CEO Joe Kennedy testified in front o a Congressional panel over Internet radio fees. Wedbush doesn't see a shift in stance by regulators anytime soon, though a drop would benefit Pandora immensely.

Dougherty & Company is taking a bearish stance on results. The firm is coming in-line with consensus views, seeing revs of $117.2 million and EPS of 1 cent. Dougherty commented, "The company has already reported 3.56B listening hours (+69% Y/Y) and 59.2M active listeners. We are assuming that the overall RPM comes in at $32.70 compared with $32.34 last quarter and $34.91 a year ago."

The biggest concern over competition from Apple (Nasdaq: AAPL) and the royalty rate adjustment is mobile ad monetization. Dougherty is expecting "continued progress this quarter, with Mobile RPM improving to $27.25, up from $22.96 last quarter and $24.94 a year ago." The firm is modeling just a 1.2 percent operating margin and notes that it will take both time and a vast sales force expansion to drive mobile RPM materially higher.

Shares are 2.2 percent higher Tuesday afternoon. Pandora's quarterly call will be accessible at (877) 355-0067 or internationally at (443) 853-1239.

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