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Albert Fried Sees More Downside For Pandora Media

Albert Fried & Company downgraded Pandora Media Inc (NYSE: P) Thursday from Market Perform to Underweight and lowered its price target from $20 to $16.

The report noted "critical issues with Pandora users, usage, and content costs" and expected "the shares to be dead money owing to the uncertainty that Pandora can grow its user base, optimize its content costs, and manage usage."

Analyst Rich Tullo also thought "there are growing alternatives in the streaming music space and Pandora risks losing users if it expands ad load too fast."

Competition is heating up with Spotify, Soundcloud out of Europe along with iHeart, Songza, iTunes radio, Radio.com and TuneIn Radio in the IP radio space, all of which may be seen as growing threats.

Other analysts, however, have been singing a different tune on Pandora.

Tullo raised his Q4 2014 estimates to $265 million from $245 million and still thought "there is significant downside to management's guidance ($275 at the mean). We think if the trend of flat user growth continues, auto sales in 4Q14E flatten, and political advertising for Pandora is in the $2 million range it is unlikely Pandora will match its guidance."

The report concluded that "as it stands now, Pandora is looking for a $30 million bump in 4Q revenue when usage and user growth is flat; we argue guidance is too high."

Pandora Media Inc recently traded at $18.70, down 2.7 percent.

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