New highs for Pandora after Needham lifts estimates


Needham's Laura Martin has raised her Pandora (P +3.8%) PT to $33 from $25, and has also lifted her FY14 (ends Jan. '14) and FY15 estimates. Martin sees the Web/mobile radio leader posting FQ3 results (due Nov. 21) that are better than prior estimates, and expects the company to continue its momentum in subsequent quarters.

Also: Martin asserts Pandora's sales investments give it an option on the $14B local radio ad market, and that the company has a 5-year lead in the auto market.

Previous: Pandora higher after releasing Oct. listener metrics

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Comments (5)
  • dgulick
    , contributor
    Comments (2354) | Send Message
     
    She was surprised by P's Oct listener metrics (surprised me too, average hours per listener up an impressive +11% from Sept):

     

    "We raise our FY14 and FY15 estimates based on actual results through October 2013 coming in higher than our previous estimates."

     

    More:

     

    "P is investing in salesmen to buy an option on the $14B local radio adverting market. This investment is hurting their reported valuation multiples today, but we expect the potential ROIs on local to be higher than the core business over time."

     

    "Revenue growth upside is provided by cars, where P generates zero revenue today and has a 5 year lead over competitors."
    12 Nov 2013, 05:12 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    "... a 5 year lead over competitors" results in a zero revenue. Nice business model!
    12 Nov 2013, 05:32 PM Reply Like
  • dgulick
    , contributor
    Comments (2354) | Send Message
     
    Zero revenues currently, but the market is forward looking. SiriusXM and AM/FM generate roughly $3.5B and $7B, respectively in annual revenues from in car listening and P is just getting into this market offering something the others can't match: personalized radio.
    13 Nov 2013, 12:04 PM Reply Like
  • tyzo
    , contributor
    Comments (31) | Send Message
     
    The long and the short of it is that Pandora provides a personalized pleasure experience that's hard to beat!
    12 Nov 2013, 05:18 PM Reply Like
  • Rollo Tomasi
    , contributor
    Comments (274) | Send Message
     
    Pandora is a great product and also a huge buy out target given the low market cap. If you're trying to make money on the short side you should look elsewhere.
    12 Nov 2013, 09:28 PM Reply Like
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