Apple Will Help Pandora (P) More Than Hurt It, Could be a Short Squeeze Candidate - Analyst
Shares of online music service Pandora (NYSE: P) have been crushed over 20 percent since last Thursday on worries Apple (Nasdaq: AAPL) could be unveiling a competing music service. However, according to Albert Fried & Company, Apple could help the company more than hurt it. This is because of the iPhone 5 rollout.
"We think Pandora shares are a derivative play on smart phone and tablet growth as our focus group panels have demonstrate Music in generally among the top Apps most sought on mobile devices by Millennial Generation users (following email and Internet Search)," analyst Rich Tullo said.
Tullo expects Pandora to post 53% Y/Y revenue growth to $114.7 million in F3Q13E from $75 million in F3Q12A.
He also thinks the stock is a "short squeeze candidate."
"Since Pandora shares have gone public the short position has expanded to roughly 30 million shares from roughly 5 million shares or 6x. We argue with roughly 50% of the float short; investors should use the recent weakness in P shares (owing to unsubstantiated media reports speculating on Apple’s possible intentions to enter the music streaming business) as a buying opportunity."
The analyst maintained his Overweight rating and price target of $13.
For an analyst ratings summary and ratings history on Pandora click here. For more ratings news on Pandora click here.
Shares of Pandora are down 1 percent Tuesday to $9.73.
"We think Pandora shares are a derivative play on smart phone and tablet growth as our focus group panels have demonstrate Music in generally among the top Apps most sought on mobile devices by Millennial Generation users (following email and Internet Search)," analyst Rich Tullo said.
Tullo expects Pandora to post 53% Y/Y revenue growth to $114.7 million in F3Q13E from $75 million in F3Q12A.
He also thinks the stock is a "short squeeze candidate."
"Since Pandora shares have gone public the short position has expanded to roughly 30 million shares from roughly 5 million shares or 6x. We argue with roughly 50% of the float short; investors should use the recent weakness in P shares (owing to unsubstantiated media reports speculating on Apple’s possible intentions to enter the music streaming business) as a buying opportunity."
The analyst maintained his Overweight rating and price target of $13.
For an analyst ratings summary and ratings history on Pandora click here. For more ratings news on Pandora click here.
Shares of Pandora are down 1 percent Tuesday to $9.73.