Analysts Tune Into Pandora News, Come Away Singing Faint Praises (P)

Editor's note: This article was a compilation of efforts between Ari Crane and Garet Zatz.

Analysts covering Pandora Media (NYSE: P) were cautiously optimistic following Tuesday's news of more than 2.5 million unique activations from automobiles.

Sell-side analysts commonly cited the news as a positive development, but hardly a game-changer. The release said the in-car milestones “demonstrate continued growth and momentum in the automotive category [...] To date, Pandora has seen more 2.5 million unique activations through integrations from the 23 major automotive brands and 8 aftermarket manufacturers with whom the company has established partnerships.”

Pandora's Chief Marketing Officer Simon Fleming-Wood was quoted as saying, “The vehicle is the traditional home of radio and thanks to our deep roster of forward-thinking automotive partners, Pandora has been seamlessly incorporated into the dash of more than 100 different vehicle models made available by our partners.”

The area of greater interest and disagreement among analysts was on how the news would affect the industry moving forward -- especially considering the impending release of Apple's (NASDAQ: AAPL) iRadio.

Richard Tullo of Albert Fried & Co. noted Pandora's growing presence in the automotive industry as a, “...good foundation for the future, since [roughly] 45% of all audio listening occurs in autos,” echoing the collective sentiment of most analysts. However, Tullo was distinct in elaborating his thoughts on Pandora's position in the industry: “Pandora is really the “Apple” of IP radio, it's really up to competitors to compete against Pandora for that space.”

Tullo went on to discuss the difficult cost structure that the internet radio industry faces moving forward, but cited Pandora's profits the past three years as a positive indicator of the company's business strategy.

James Goss of Barrington Research took a different stance when discussing Pandora and its competitors: “It's not like they're baseball teams all playing the same game, [Pandora, Apple, etc.] are all going after their own niche. Apple does not supersede the brand that Pandora has built.”

Goss went on to state that the real challenge for Pandora, “... is building on what they have created and moving towards profitability,” saying that the monetization of new advertising opportunities is vital.

Pandora shares closed about 8.5 percent higher on Tuesday and are continuing higher Wednesday. The stock last traded at $17.50, up nearly seven percent for the session.