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Will Pandora's (P) Ticketfly Buyout Boost Q3 Earnings?

Pandora Media Inc.P is set to report third-quarter 2015 results on Oct 22. Last quarter, the company posted a loss of 8 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 11 cents.

Let's see how things are shaping up for this quarter.

Why a Likely Positive Surprise?

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +50.00%. This is a meaningful and leading indicator of a likely positive surprise for the company.

Zacks Rank: Pandora sports a Zacks Rank #1 (Strong Buy). Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating estimates.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

What's Driving the Better-than-Expected Earnings?

Pandora reported encouraging results in the last quarter, surpassing expectations on both counts.

Increasing demand for music streaming, improving monetization (especially from the local ad revenues) and strong mobile growth are the key positives. We believe that Pandora will benefit from the growing subscriber base, listening hoursand market share gains.

Recently, the company declared its plans to acquire ticket provider Ticketfly for $450 million in a deal that is expected to be completed by the end of the year.The combination of Pandora and Ticketfly will allow the duo to harness user generated data to tell fans when bands or artists are in town and sell tickets while also steering artists to areas where large amount of people gave them a "thumbs up" on Pandora's platform.The purchase is expected to put Pandora's platform at the top when it comes to independent artist marketing.

Nevertheless, mounting competition from peers like Apple AAPL Music and Spotify remains a concern. Moreover, rising costs related to licensing and higher operating expenses will also remain a near-term concern.

Stocks to Consider

Here are some other stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Fiserv, Inc. FISV with Earnings ESP of +3.09% and a Zacks #2 (Buy).

Visa Inc. V with an Earnings ESP of +16.13% and a Zacks Rank #1 (Strong Buy).

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PANDORA MEDIA (P): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

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


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

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