2Q Preview: Is the IPO Grizzly Bear Coming for Pandora (P) Next?

By
A A A

Shares of internet radio company Pandora Media ( P ) are down 1.9 percent since the end of June, which capped a second quarter performance that could best be described as "choppy." The company reports second-quarter 2013 earnings after U.S. markets close tomorrow and shares are trading higher on Tuesday in preparation for solid results. Analysts are expecting the company to report a loss 3 cents per share, in-line with last year's EPS, on revenue of $101 million.

Analyst say the company is well positioned to take advantage of growth in smartphones and tablets, and that many consumers consider Pandora a must have app. However, considering the beating that Pandora's IPO peers Facebook (Nasdaq: FB) and Zynga (Nasdaq: ZNGA) have taken, many are feeling cautious ahead of the earnings print.

Data from Streetinsider.com's ratings insider has 15 analysts with a Buy rating on Pandora, 8 have neutral rating, and 3 rate the company a sell. The average price target is $13.84, with a range of $20 to $3.75.

Analyst Comments:

  • "We believe the lack of meaningful earnings has negatively impacted valuation. We believe management is correct in focusing on more meaningful earnings growth in the long-term. However, we believe that investors will lose patience if Pandora's earnings growth lags its advertising revenue growth significantly in 2H:13," said analysts at Wedbush.

    "We expect Q2 results above the high end of guidance. We expect revenue above our estimate of $102 million, compared with consensus of $101 million, and guidance of $99 - 101 million. We expect the top-line beat to be driven by slightly better-than-expected CPMs that reflect a stronger advertising presence and continued market share gains," analyst Michael Pachter.

    "In addition, we expect EPS above our estimate of $(0.01), compared with consensus of $(0.03), and guidance of $(0.05) - (0.03). We expect management to raise FY:13 guidance for revenue of $420 - 427 million and EPS of $(0.11) - (0.07). However, we do not expect the beat to be fully passed through. After exceeding the high-end of guidance in two of three quarters as a public company, and after failing to fully pass through the Q1 EPS beat, we expect management to once again be conservative," added Pachter.

  • "Strategic differences between Pandora and companies influenced by the Face Book ecosystems lead us to conclude Internet Radio will be influenced by long-term fundamentals driven by the migration of Audio content from Terrestrial Radio to IP distribution," said analyst Rich Tullo of Albert Fried and Company.

  • "We predict P revenue to expand 50% Y/Y to $100.4 million in F2Q13E from $66.9 million in F2Q12A. We expect, content costs to expand 95% to $65.8 million in F2Q13E from $33.7 million in F2Q12A as increase service usage and rate card increases weigh on results. Thus we expect P to post a $13 million loss in F2Q13E (-$0.08 per share) as compared to a $3 million loss in F2Q12A. We note the $13 million loss we expect is a modest sequential improvement from $20 million in F1Q13A," added Tullo.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Pandora's past performance at Streetinsider's Pandora's Income Statement .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings , Stocks

Referenced Stocks: FB , P , ZNGA

StreetInsider.com

StreetInsider.com

More from StreetInsider.com:

Related Videos

Russell’s One Good Reason
Russell’s One Good Reason           
Tammy’s One Good Reason
Tammy’s One Good Reason             
Lisa’s One Good Reason
Lisa’s One Good Reason              
Tammy’s #OneGoodReason
Tammy’s #OneGoodReason              

Stocks

Referenced

71%
65%
66%

Most Active by Volume

54,920,841
  • $7.27 ▲ 21.37%
44,822,711
  • $17.145 ▲ 0.68%
35,276,465
  • $8.96 ▼ 4.88%
28,342,494
  • $74.98 ▲ 1.17%
27,329,309
  • $33.755 ▲ 3.61%
23,592,722
  • $101.345 ▲ 1.32%
22,270,253
  • $107.56 ▲ 0.54%
21,493,484
  • $4.1233 ▼ 7.55%
As of 10/31/2014, 01:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com