Nomura Securities Remains Sidelined on Pandora (P) as CRB's Ruling Came Roughly In-Line with Expectations
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Nomura Securities reiterated a Neutral rating on Pandora (NYSE: P), and raised the price target to $17.00 (from $16.00), following the Copyright Royalty Board's (CRB) new rates for the “Web IV” proceeding for the 2016-2020 period. At $0.17 per hundred songs streamed, the new Webcaster IV rates are in line with investors’ expectations. Rate increases linked to CPI are slightly lower than anticipated.
Analyst Anthony DiClemente commented, "On Wednesday, the Copyright Royalty Board (CRB) issued new rates for the “Web IV” proceeding for the 2016-2020 period; in-line with our 2016 model, the rates are set at $0.17 per 100 songs streamed in 2016 with annual increases linked to the Consumer Price Index. We believe that the increase relative to 2015 rates is largely in-line with investor expectations, but the certainty around content costs is a clear positive; moreover, the annual step-ups and lack of percent of revenue cap are both more benign than we expected. Longer term, Pandora could reaccelerate growth via international expansion; we await further success with direct label deals and the shift to on-demand products. Focus now should shift toward Pandora’s fundamentals; we are modestly cautious on listener hour trends heading into 2016, owing to competitive pressure. We modestly increase our margin expectations in the LT model, and we raise our Target Price to $17 from $16."
Shares of Pandora closed at $13.44 yesterday.
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