While many analysts are bearish on Pandora Media Inc (P), Piper Jaffray & Co. Analyst James Marsh has a constructive view of the stock. He previously had a “hold” rating on the stock, and his primary concern was that the company was having trouble monetizing its listenership.
“However, they got back on track on that front, and I think monetization is probably the single most important thing to follow when you are trying to make money on the Pandora stock,” he says.
Marsh says two issues have put a lid on the share’s performance. One is the ongoing rate renegotiation process at the Copyright Royalty Board, which he expects to wrap up by the end of the year. The other is a steady stream of competitors moving into the market, which he says Pandora has done a good job of fending off.
“We think we will get positive news from the Copyright Royalty Board. It also removes the uncertainty about the largest expense line, content costs,” Marsh says. “And I think it also provides an opportunity for Pandora to work more directly with the labels after that deal is done, so that they can move their service internationally.”
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