SunTrust Robinson Humphrey Reiterates Buy on Pandora (P) Following Announced Direct Deals
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SunTrust Robinson Humphrey reiterated a Buy rating and $18.00 price target on Pandora (NYSE: P) following the company's announced U.S.-only direct deals with most major labels.
Analyst Robert Peck commented, "Pandora announced direct deals with most major labels, which would allow it to launch new interactive services and enhance existing products. Under the terms of the deals, Pandora's royalty expenses likely would be higher than current estimates, and are easier to quantify. However, given limited information, the revenue opportunity remains uncertain. Our analysis suggests improved monetization from new higher-CPM ad units could offset potential cost increases without impacting user experience. Shares attractively priced at ~2x 2018 revenue and ~14x normalized EBITDA; Reiterate Buy and $18 PT."
Shares of Pandora closed at $14.10 yesterday.
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