JMP Securities Issues 'Market Perform' On Pandora
February 25, 2015 at 1:10 PM (PT)
JMP SECURITIES initiated coverage on PANDORA MEDIA with a MARKET PERFORM rating, highlighting some of the stock's postives and negatives moving forward.
--With 81+ million monthly active listeners, PANDORA is the leading U.S. pure-play streaming music service.
--Strong brand position as it continues to take share of U.S. radio listener hours.
--PANDORA should continue to benefit from the secular growth of mobile, its strong brand positioning, pricing tailwinds from local market expansion, and the in-dash car opportunity.
--Decelerating active user growth and engagement.
--Uncertainty around content costs, which JMP expect to remain an overhang on shares.
To become more constructive on PANDORA shares, JMP would look for:
--Reacceleration of user growth and listener hours.
--Direct deals with major record labels.
JMP states that PANDORA "is well positioned to continue to take share in the U.S. radio and U.S. online advertising markets, noting, at $15.47 (where it closed yesterday, up 3.8%), PANDORA shares trade at an enterprise value equal to 20.8x 2016 EBITDA estimate of $150 million and 2.2x 2016 revenue estimate of $1.43 billion. For 2015, JMP projects revenue of $1.158 billion (up 28% Y/Y), Adjusted EBITDA of $73 million (up 26% Y/Y, 6.3% margin), and PF EPS of $0.22.