Pandora (P) Ratings, PT Affirmed by Cowen Following Q4 Results; New Investments to Crimp EBITDA

Cowen and Company reaffirms Pandora (NYSE: P) with a Market Perform rating and $9 price target following Q4 results issued Thursday night.

Analyst John Blackledge commented, Pandora reported mixed 4Q results as revenue/listener hours were largely in line, while EBITDA/users were a bit light. In line 1Q16/FY16 revenue guide was offset by a much weaker 1Q16/FY16 EBITDA guide that's significantly below our/consensus pre-print estimates as P is investing in the future, mainly in a new On Demand offering (1Q17-ish launch).

On guidance, Blackridge noted, Management introduced new 5 year revenue/profitability projections which call for $4 billion in total revenue by ’20, broken-down as follows: i) $2.4 billion from the core internet radio biz (ad supported & PandoraOne) vs. our current $2BN estimate in '20, it implies accelerating growth off '16, ii) $300 million from Live Events/Sponsorship (mainly TicketFly) vs. our $138 million estimate in '20, and iii) $1.3 billion from new music offerings (not included in our model at this point), primarily from its a new on-demand music offering (like Spotify, etc), which is contingent on securing direct deals with major labels and likely launching in early '17. Management target 13% Op Margins (Non-GAAP) by ’20 and 15%+ beyond, includes int’l investment starting in ’17.

For an analyst ratings summary and ratings history on Pandora click here. For more ratings news on Pandora click here.

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