A talk with Pandora's (P +3.4%) IR team has given Canaccord's Michael Graham (Buy, $43 PT) "renewed confidence in Pandora’s ability to exceed [Canaccord's] revenue targets over time, especially when viewed through the lens of future local sales capacity."
Pandora has been spending heavily to grow its local ad salesforce: Sales/marketing spend rose 63% Y/Y in Q1 to $61.8M.
Meanwhile, MKM's Rob Sanderson (Buy) believes Pandora could see $5.60/year in EPS one day with the help of rising ad load. He observes that while Pandora has a 9% share of ad-supported radio listening, its audio ad sales "represented less than 2% share of the spending pie last year."
Pandora's 2014 and 2015 EPS consensus estimates are only at $0.17 and $0.48, respectively. Though its ad load has been rising, the company has been taking a measured approach in order not to alienate users who have plenty of alternatives.
Shares have topped $29 for the first time since April.