Albert Fried Expects Pandora Shares To 'Shake It Off-Shake It Off,' Reiterates $19 Target

With the launch of Apple Inc. AAPL‘s Apple Music imminent, Albert Fried & Co. analyst Rich Tullo decided to take an in-depth look at streaming music rival Pandora Media Inc P.

Despite Apple’s hyped-up new presence in the streaming music space, Tullo believes that Pandora still has a firm grip on the world of streaming radio.

Competition Heating Up

According to Tullo, Apple Music’s premium pricing doesn’t pose a threat to Pandora and Spotify’s IP radio services for the time being. In addition, Tullo sees Google Inc GOOG GOOGL’s revamped Songza as more of a threat to Spotify than Pandora, as it is track-based (the user selects the song) rather than pure-play radio.

Related Link: Apple Music's Launch And The Impending Topple Of Competition

Rate Case

Tullo believes that the outcome of Pandora’s rate case is unpredictable, and the court could decide on rates anywhere between 10 to 30 nano-pennies (NP) per spin. However, he predicts that the most likely outcome is 20 NP, in-line with the rates that Pandora was anticipating prior to an industry rate relief agreement.

Top App

Despite share prices falling by 18.3 percent in the month leading up to the launch of Apple Music, Pandora’s app is still ranked the number 5 app, according to App Annie, beating the apps of Netflix, Inc. NFLX (ranked 12), Spotify (ranked 18) and Snapchat (ranked 6).

Pandora’s app is also the third highest-grossing app on App Annie, trailing only Clash of Clans ad Game of War-Fire Age.

Outlook

Overall, Tullo sees moderate upside to Pandora’s stock and sees downward price fluctuations as potential buying opportunities. Albert Fried has a Market Perform rating on Pandora and a $19 target for the stock.

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