- Pandora Media (NYSE:P) is 5.3% lower today after its Q3 earnings miss yesterday, and a few analysts take the opportunity to downgrade shares.
- Albert Fried dinged the stock two notches, lowering its rating to Underweight from Overweight. "Given the negative guidance, negative FCF, and convoluted business model we think Pandora is no longer a takeover target," says analyst Rich Tullo.
- A lull alone would still support a deal, he says, but burning cash while taking risks with the user base (potentially driving customers to iTunes or Spotify) makes it less attractive. He's got an $8 price target, implying 30%-plus downside from today's lowered price.
- FBR Capital also downgraded, to Market Perform, but with a $12 price target (vs. current $11.54). But Mizuho is sticking with a Buy rating (while lowering its target to $12 from $13) due to some positives from Investor Day: "While we like the long-term opportunity of subscription, proof will be in execution over the next few quarters."
- Nomura stayed Neutral and reiterated its $14 price target (21% upside from today), as management reiterated its ambitious growth targets and subscription initiatives. The Street will get more optimistic if Pandora can prove its $10/month product against fierce competition from Spotify, Apple, Amazon and YouTube, it said.