Rosenblatt Maintains Buy Saying Pandora (P) has 'Underlying and Untapped' Earnings Power

Rosenblatt maintains a Buy rating and $20 price target on Pandora (NYSE: P) saying P's base model has "underlying and untapped" earnings power. Analyst Martin Pyykkonen says that P's base model includes a few key financial drivers; creating additional ad inventory, higher ad sales force effectiveness, and driving ad load rates up without disrupting consumer experience.

Pyykkonen commented on Pandora, saying, "We are maintaining our Buy rating on Pandora with a $20 price target, based on ~25x EV/EBITDA on our 2016 EBITDA estimate of $147 million. We think Pandora has an effective advertising driven sales model with overall usage driving ad inventory to sell and we think ad load rates can be gradually driven higher from current levels, which are still well below the intolerable ad loads of most terrestrial radio stations. Our model estimates do not include a significant windfall benefit from royalty rate concessions, of which statutory rate decisions should be made by the CRB by the end of this year and go into effect starting in 2016. We think Pandora is effectively selling radio ads as it has ramped its direct salesforce (>430 total, including >100 additions YTD in the typically highest sales hiring period of early calendar year)."

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 $18.14 yesterday.

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