Mizuho is Warming Up to Pandora (P)

Mizuho Securities analyst, Neil Doshi, reiterated his Neutral rating on shares of Pandora (NYSE: P) but noted positive discussions with the CEO and COO. The analyst hosted an investor meeting with Tim Westergren, co-founder and CEO, and Sara Clemens, COO. Management's tone was positive on the long-term prospects of the business, on the ability to create a new and differentiated on-demand product, and on the company's ability to get deals done at reasonable economics.

The publisher contracts are done, and the company is currently working to complete key direct deals with the labels - he feels confident that these deals can be done in time for a late-2016 launch.

Pandora's engagement of 24 hours/user/mo is more than 2x its competitors, and Pandora can leverage the station creation and thumb ups/down activity to create highly personalized experiences on the On-Demand product. We believe that Pandora can use this to create a unique product and tap a large user base to acquire users for the new service without breaking the bank on customer acquisition costs. However, Pandora could see some initial, modest cannibalization from its existing services as it navigates this new business model addition.

The analyst notes that he is warming up to Pandora but wants to evaluate the new service before making a ratings change.

No change to the price target of $11.00.

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 $13.69 yesterday.

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