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Shares of Pandora Rise on Stock Upgrade by Morgan Stanley

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Pandora’s price movement

Pandora (P) has a market cap of $2.7 billion. It rose by 5% to close at $12.06 per share on June 28, 2016. The stock’s weekly, monthly, and trailing 12-month (or TTM) price movements were 2.5%, 5.6%, and -22.4%, respectively, on the same day.

Pandora is trading 2.3% above its 20-day moving average, 12.7% above its 50-day moving average, and 19.6% above its 100-day moving average.

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Related ETF and peers

The First Trust Dow Jones Internet ETF (FDN) invests 1.2% of its holdings in Pandora. The market caps of Pandora’s competitors are as follows:

Morgan Stanley upgrades Pandora

According to investment bank Morgan Stanley (MS), Pandora’s core radio business is profitable and has experienced YoY (year-over-year) growth as well. Pandora was upgraded to “overweight” from “equal-weight” on June 27, 2016, as the company has the ability to acquire music rights from labels. This ability is needed to launch an on-demand product.

Earlier this month, Axiom Capital also upgraded the stock to “buy” with a 12-month target price of $16.

Pandora expects its core Internet radio business to hit revenues of $2.4 billion in the next five years. It expects its core Internet radio business to contribute substantially to a gross margin of ~40% in 2016.

According to the RIAA’s (Recording Industry Association of America) Shipment and Revenue Statistics report, streaming services comprised 34.3% of the US recording industry’s total revenues in 2015.

As the above chart shows, paid subscription-based music streaming contributed ~$1.2 billion to total music streaming revenues in the United States in 2015.

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