Maxim Group Maintains a 'Buy' on Pandora (P); Adjusts Numbers After Strong Revenue Increase in Q2

Maxim Group maintains a 'Buy' on Pandora (NYSE: P) price target lowered from $23 to $17.

Maxim analyst says, "Pandora reported 2Q12 revenues of $66.9M (up 117% y/y and 31% q/q) which beat our estimates of $63.7M and consensus estimates of $61.1M. Advertising revenues were $58M (up 118% y/y and 33% q/q). The company suggested about half of advertising revenue came from mobile, which is still under-indexing its 70% share of listening. Subscription revenues were $8.7M (up 112% y/y and 18% q/q). We estimate that ARPU/active users increased 19% y/y to $1.89 from $1.58. Hours listened/active user/quarter increased 25% y/y to 50.7, from 41, highlighting growing individual usage of the service. Content costs/listener hour/quarter increased marginally y/y to 1.9 cents from 1.8 cents. 2Q12 EBITDA was $4.5M, vs. our estimates of $3.6M and consensus estimates of $2.2M."

"We are raising our 3Q12 revenues estimate to $73M (up 94% y/y and 9% q/q) from our prior estimate of $70.3M and our EBITDA estimate to $3.5M from our prior estimate of $2.3M...We are raising our FY12 revenue forecast to $271M (up 97% y/y) from $263M and FY13 revenues to $426M (up 57% y/y) from $410M. Management is guiding towards FY12 revenues of $270M to $275M."

For more ratings news on Pandora click here and for the rating history of Pandora click here.

Shares of Pandora closed at $12.47 yesterday.

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