Pandora shares climb after analyst upgrade

June 26, 2013

NEW YORK (AP) -- Shares of Pandora Media Inc. got a boost Wednesday after a Cowen analyst upgraded the Internet radio company citing ad revenue gains and what's likely a "manageable" threat from Apple Inc.'s iTunes Radio service.

THE SPARK: John Blackledge upgraded Pandora's stock to "Outperform" from "Market Perform" and raised his target price to $22 from $15. He expects the company's audio advertising revenue to grow from $293 million in 2014 to $1.8 billion in 2019 as people listen to its stations longer and the number of advertisements it serves increases, along with pricing.

BACKGROUND: The analyst said Pandora's share of radio listening in the U.S. continues to increase, even with competition from iTunes Radio, which Apple unveiled earlier this month. He called the threat from Apple "manageable." Available in the fall, Apple said the Internet radio service will personalize listeners' music based on what they've listened to and what they've purchased on iTunes.

ANALYST COMMENT: Blackledge thinks that growing smartphone use, along with the introduction of new Internet radio services and growing integration into cars — where about half of U.S. radio listening takes place — will continue to increase the time people spend listening to Internet radio, including Pandora.

SHARE ACTION: Up $1.14, or 7 percent, to $17.55 in afternoon trading. The stock has traded in a 52-week range of $7.08 to $19.37.