At least one analyst is seeing enough potential growth within Pandora (P) that he believes P stock is set to boom.
Canaccord Genuity’s Michael Graham reiterated a Buy rating on shares of the Internet radio company with a $35 price target.
He writes that a sample of some 16 hours of programming during last month showed “stable trends” in advertising.
Our sampling suggests that the ad load in December was slightly down sequentially to 5.3 spots per hour from 5.4 spots in November and in line with 5.3 spots in October. The split between 30- and 15-second spots was 70/30% in December, compared to 84/16% in November, implying that the average ad load across the tested geographies currently stands at 2.2 minutes. Local audio ad spots across the tested geographies accounted for 45% of total in December, compared to 45% and 48% in November and October. We estimate that average Q4/13 local mix stood at 46% compared to an estimated 41% in Q3/13, suggesting a possibility of additional RPM expansion from mix shift to local.
Barrons reports that Graham, who models the company make $198 million in revenue in the quarter ended last month, “thinks that there may be upside based on a potential for an additional $1 in “revenue per thousand listener hours,” which he’s officially modeling as $37.73 but could go up above $38.”
Other analysts also think P stock is set to increase — though estimates vary.
The ongoing growth in mobile devices is expected to help near-term growth for Pandora.
In November, listener hours increased as did active users, with listener hours at 1.49 billion, an increase of 18% from 1.27 billion during the same period last year. Share of US radio listening for Pandora for the month was 8.44%, up from 7.17% last year.
BMO Capital Markets analyst Edward Williams said, with an investment in sales, he expects monetization growth to be able to outpace usage growth, helping to drive improving profitability. (via IstockAnalyst.com)
And increasingly, Pandora is pushing hard to gain local advertisers.
Pandora stock is up only 2% year to date.