Tech Analyst: Pandora's 'Solid' Q4 Shows Signs Of Executing On Strategy

Pandora Media Inc P reported its fourth quarter results, which emphasized the bullish case for owning the stock, according to William Blair.

The Analyst

William Blair's Ralph Schackart maintains an Outperform rating on Pandora Media's stock.

The Thesis

Pandora reported a revenue and adjusted EBITDA beat as advertising revenue came in 6 percent ahead of what the Street expected while subscription revenue beat estimates by 4 percent, Schackart said in a note. The company also added around 300,000 net paying subscribers and while Pandora Plus subscriptions fell sequentially, the decline in the fourth quarter was less than what was seen in the third quarter.

The streaming music company's earnings should give investors confidence that it's in the early stages of a turn-around, the analyst said. Management's commentary on its strategy during the conference call is encouraging, Schackart said, and the leadership team deserves to be given a chance to execute on its game-plan over time.

There are some risks to Pandora's business in 2018 given there are many "moving parts," the analyst said. But the company faces a large opportunity from the $16 billion terrestrial radio market over time and after a more than 60 percent decline in the stock over the past year, shares "have limited downside at these levels."

Price Action

Shares of Pandora were trading higher by more than 4 percent at $5.08 Thursday morning.

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