Now that CEO and co-founder Tim Westergren is no longer at Pandora Media, has the Oakland, Calif.-based streaming audio company found its groove? Recent activity on Wall Street, coupled with a positive financial analyst’s rating and news of a new investment suggest Pandora’s worst days are now a part of its most-recent past.
As of 11:19am Eastern on Monday, Pandora was trading at $9.59, up 1.3%. At the Closing Bell, the company’s stock finished up 1.8%, at $9.64, on near-normal volume.
Should Pandora finish the day’s trading session at or near this price, it will mark the highest close for “P” shares since May 15.
That’s good news for Pandora, which saw Morgan Stanley on July 5 resume coverage of Pandora by assigning it an Overweight rating and a $12 price target.
Morgan Stanley’s report came following the June 27 announcement that Westergren would depart as Pandora’s chief executive while also agreeing to depart the company’s board of directors. Perhaps more significantly was the concurrent exit of President Mike Herring and CMO Nick Bartle from Pandora.
The Morgan Stanley report also arrived a week after Pacific Crest Securities analyst Andy Hargreaves upgraded his rating on Pandora to “sector weight” from “Underweight,” a rating given to Pandora in March. But, he was conservative in his price estimate on “P.” Hargreaves’ bull case price target is $16, while his bear case price target is $3.50.
No bull: Pandora’s a Bull
Pandora shares saw a pre-market burst of buys on Monday before cooling down in mid-morning activity.
According to Bloomberg News, JANA Partners has made an investment of unknown size in Pandora. The infusion of funds is tied to its belief that Pandora’s potential for ad revenue growth remains substantial.
JANA Partners specializes in event-driven investing and was founded in 2001 by Managing Partner and Co-Portfolio Manager Barry Rosenstein. As the firm notes on its website, “JANA typically applies a fundamental value discipline to identify undervalued companies that have one or more specific catalysts to unlock value. In certain cases, JANA can be the instrument for value creation by becoming an actively engaged shareholder. JANA invests both long and short and across the capital structure including equity and debt.”
At the same time, SunTrust kept its “buy” rating on Pandora, and set a price target of $10.50—a realistic target for the company’s shares given its 60-day trajectory.
The rating from SunTrust analyst Matthew Thornton resulted from a meeting with Pandora’s interim CEO, Naveen Chopra, who notes that Pandora will lower investment “to maintenance levels” while retaining its subscription model. This suggests the on-demand all access model, rather than the free with commercials platform, will prove profitable for Pandora.