Pandora's Q1 Shows 'Some Promising Signs' Of A Turnaround Canaccord Says

Pandora Media Inc P reported Thursday its first-quarter results, which showed "some promising signs" of a turnaround, according to Canaccord.

The Analyst

Canaccord Genuity analysts led by Maria Ripps maintain a Buy rating on Pandora with a price target lifted from $7 to $8.

The Thesis

Pandora's earnings showed a continuation of declining audience metrics as overall listeners fell 6 percent from a year ago and ad hours declined 12 percent, Ripps said in a research report.At the same time, the subscription business expanded 20 percent from a year ago and this metric is "paramount for the stock." Ongoing content-building steps will help in growing the subscription business, especially in podcasts where management believes its data can improve relevance for listeners an advertisers.

Pandora also showed progress in monetization metrics as RPM (revenue per 1,000 listening hours) expanded by 9 percent, the analyst wrote. This marks the slowest growth rate seen in the past few quarters, but it still marks an expansion and came in ahead of estimates. Investors can expect further momentum in monetization as management plans to combine recently acquired AdsWizz with its existing platforms to encourage more programmatic liquidity.

Ripps said Pandora's transition towards growth and profitability may take some time and "keep a lid on the stock" the earnings report demonstrates the value in its large and engaged listener base.

Price Action

Shares of Pandora were trading higher by nearly 24 percent at $7.14 Friday morning.

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