What Was Bullish Vs. Bearish In Pandora's Q2 Beat

Pandora Media Inc P's earnings report Monday contained a mix of good and bad that will likely leave investors debating the company's outlook.

The Bullish Take

The streaming music company showed a notable improvement during the quarter in its advertising business as Ad RPMs rose 24 percent year over year, BMO Capital Markets' Daniel Salmon stated in a research report. Looking forward, Pandora can get a "further bump" from the launch of new programmatic capabilities in the back half of 2017 as management is refocusing on its core advertising opportunity.

Meanwhile, local was strong in the quarter and surpassed 30 percent of total ad revenue for the first time ever, the analyst added. Similarly, the company faces a compelling opportunity for incremental expansion moving forward.

The analyst maintains a Market Perform rating on Pandora's stock with a price target lowered from $12 to $11.

The Other Side Of The Story

Canaccord Genuity's Michael Graham maintains a Buy rating on Pandora's stock with a price target lowered from $15 to $14 after the company's earnings report "reinforced" some of the bullish themes. But that doesn't mean there weren't any bearish aspects of the earnings report.

Pandora's listener hours figure was lower by 8 percent on a year-over-year basis while total net subscriber adds were just 150,000 in the quarter, Graham noted. Also, Pandora's decision to decrease its focus on converting ad-supported listeners into paying subscribers played a role in the full year revenue guidance reduction.

On the other hand, this does signal that Pandora is "trying to be smarter about which listeners it pushes towards subscriptions."

At time of publication, shares of Pandora were down 3.36 percent at $8.65.

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