Citi’s Mark Kelley expects Pandora Media Inc P to launch its new on-demand offering by the end of the year.
Kelley reiterated a Buy rating on the company, with a price target of $16.
On-Demand
“In recent appearances, management has suggested its on-demand offering will likely be more than one tier,” the analyst mentioned.
Management also indicated that the product would potentially address multiple price points, with differing capabilities.
Kelley expects the on-demand offering to raise Pandora Media’s revenue by 26 percent and net revenue by 22 percent.
Spotify
Kelley noted that the content acquisition costs for Spotify were increasing, offsetting some of the benefit in the assumptions for the on-demand product.
“Recent international filings indicate Spotify is spending 84 percent of revenue on content, an increase from the 70 percent the company had previously disclosed,” the analyst noted.
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