Pandora Media Inc. (NYSE:P) is set to report third-quarter results after the markets close on Thursday, at which point investors will find out if the release of Apple’s (NASDAQ:AAPL) competing iTunes Radio this fall affected Pandora’s financials.
Analysts seem pretty optimistic about Pandora’s continued domination of online radio. Brian Nowak of SIG Susquehanna Financial Group, LLP upgraded the firm’s price target on the stock from $30 to $36 on Monday. According to a note seen by Value Walk, SIG said that Pandora has been expanding into local radio advertising faster than previously expected. Nowak expects Pandora to bring in $70 in local ad dollars during fiscal 2014 and believes that figure will double by the following year.
Maxim Group has also raised its expectations for Pandora in advance of the company’s earnings report, according to a note seen by Barron’s. The firm said that it believes Pandora is monetizing its mobile platform faster than previously thought. Maxim maintained its forecasts for earnings of $13.6 million, but raised its revenue forecast from $164.4 million to $173.6 million. Part of the reason for all this optimism is that Pandora’s listening hours don’t seem to have been affected by Apple’s launch of iTunes Radio. At the beginning of the month, Pandora CFO Michael Herring said that Pandora’s listening hours grew 9 percent in October versus September, growing its online radio market share from 7.7 percent to 8.06 percent. Pandora listeners streamed a total of 1.47 billion hours of music in October.
According to a recent survey from Canaccord, 92 percent of iTunes Radio listeners still use Pandora, which led the firm to make the correct guess that Pandora’s October metrics wouldn’t be impacted by iTunes Radio. The firm believes evidence of Pandora’s continued good performance in the face of competition from iTunes Radio could be a positive catalyst for Pandora shares, and the analyst reiterates its Buy rating and $30 price target for the stock.
Analysts from Zacks have a bullish outlook for Pandora stock, also citing Pandora’s success at increasing monetization. Zacks believes that Pandora still has a tight grip on its market share despite increased competition from iTunes Radio. Zacks also said that Pandora has now delivered a positive earnings surprise of 150 percent over the past four quarters, and the firm expects Pandora to impress again in the third quarter. We will see if Pandora lives up to these high expectations when it reports third-quarter results after the bell on Thursday.
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