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
.