Pandora's announcement last week of a strategic investment from Sirius XM Holdings Inc. SIRI and a sale of Ticketfly prompted Oppenheimer's Jason Helfstein to downgrade the stock from Outperform to Perform while removing a prior $14 price target.
SiriusXM's strategic investment will help the streaming music provider refocus on the core advertising strategy, Helfstein argued. But there will be a transition period in which Pandora's management will need to:
- Finalize and introduce its digital audio ad-tech tools.
- Hire more experienced operating managers.
- Improve integration in the car.
Also, SiriusXM's strategic investment "obviously ends any takeout speculation" which creates limited upside in the near-term. Over the longer term, Pandora is on the right path and could even act as a distribution channel for Sirius' exclusive content to monetize non-paying users.
Check out Jason Helfstein's track record.
Bank Of America Reaffirms At Buy
Bank of America's Mark Kelley reaffirms a Buy rating and $12 price target on Pandora's stock following the SiriusXM announcement. Similar to Helfstein's thesis, the deal does end M&A speculation (for the time being) but this is could be seen as a positive.
Pandora now boasts a better balance sheet which it can use to invest in its on-demand platform, the analyst added. Also, the sale of Ticketfly was a necessary move and better positions Pandora to focus on its core product.
Related Links:Keith Meister's Bullish Stance On Pandora 2.0
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