Piper Jaffray Downgrades Pandora (P) to Neutral
Piper Jaffray downgraded Pandora (NYSE: P) from Overweight to Neutral with a price target of $17.00 (from $23.00).
Analyst James March commented, "We are downgrading Pandora as competition is meaningfully impacting growth while expenses like content and market accelerate into 2016. We previously felt comfortable that a positive CRB outcome would cap content costs, remove uncertainty and pave the way for an international licensing deal (driving listenership growth and shares higher). But that assumed a base level of growth. We now see competitive actions sapping growth from Pandora's model, as the 'cost of admission' to direct talks with labels is getting pricey ($90M to settle the pre-1972 lawsuit and $24M to settle with ASCAP/BMI). While we still think a direct deal could happen, at present we lack the details to appropriately model it at this stage. So with core growth slowing, and lack of visibility into their new model we believe it is best for investors to move to the sidelines. We are reducing our price target from $23 to $17."
The firm cut FY 2015 EPS from $0.24 to $0.15 and FY 2016 EPS from $0.54 to $0.44.
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 $19.19 yesterday.