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Pandora (P) Investors 'Happy' as CRB Ruling now in Rear-View Mirror - RBC's Mahaney

December 17, 2015 7:16 AM

RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating and $20 price target on Pandora (NYSE: P) after the CRB issued their ruling for Pandora’s future content costs for ad-based/sub-based listening at $0.17/$0.22 per 100 spins, effectively a 15% increase over 2015 rates.

"We believe P, and investors, are happy to have this ruling in the rear-view mirror so mgmt can now focus on the future," Mahaney commented. "While the 2016 ad-based rates are above our prior model, the 15% blended cost increase is in-line with soft management guidance and we believe is likely much better than many investor “downside” cases. Further, the inflation-based increases are likely below what most modeled, leading to Content Cost leverage over time."

He added, "We believe that IF Pandora can successfully alter the platform to incorporate more “lean forward” features it could re-accelerate user and usage Metrics. Direct licensing deals could also lead to international rights, which would be a huge leap forward. The first step in achieving these goals was a reasonable CRB outcome, which we see as achieved. Now it is up to management to execute."

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 $13.44 yesterday.


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