Why Pandora, Frontier Communications, and Brocade Have Soared



FBR upgrades Pandora to “outperform”

Shares of Pandora (P) rose 10% on February 17, 2016, following an upgrade by FBR Capital. FBR Capital upgraded the stock to “outperform” from “market perform” and maintained its target price of $16. Pandora is expected to invest $345 million in 2016 to scale up infrastructure and build new business lines.

Pandora’s management believes that the company will be able to build a subscription business worth $1.3 billion in the next five years based on a customer conversion rate of 10% and 81.1 million listeners at the end of 4Q15.

Pandora’s shares rose 19.8% in the trailing-five-day period ending February 23, 2016. The stock fell 17% after Pandora announced its 4Q15 results earlier this month.

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Impressive 4Q15 results drive shares of Frontier Communications

On February 23, 2016, shares of Frontier Communications (FTR) rose 12.6% to $5.08 as the company reported net income growth of 55.6% YoY (year-over-year). Revenues for FTR rose 6% YoY from $1.3 billion in 4Q14 to $1.4 billion in 4Q15. Net income rose from $36 million in 4Q14 to $56 million in 4Q15, whereas earnings per share rose to $0.05 from $0.04.

FTR has risen 19.5% in the trailing-five-day period ending February 23.

Brocade Communications Systems beat analysts’ estimates

On February 18, 2016, shares of Brocade Communications Systems (BRCD) rose by over 10% as the company beat analysts’ estimates for revenues and earnings in fiscal 1Q16. BRCD reported revenue of $574 million, which was 0.35% lower than revenue in fiscal 1Q15 but $13 million higher than analysts’ estimates. Weak demand for embedded and fixed configuration Fibre Channel switches resulted in a decline of 2% for BRCD’s SAN product revenues.

IP networking product revenue rose 1% YoY to $134 million due to strong demand from enterprise customers. Shares of the firm rose 19.3% in the trailing-five-day period ending February 23.

Pandora accounts for 0.2% of the Vanguard Information Technology ETF (VGT). The top holdings of the ETF include Apple (AAPL), Microsoft (MSFT), and Facebook (FB), which constitute 15.5%, 8.3%, and 4.7%, respectively, of VGT.


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