That’s what SunTrust Robinson Humphrey analyst Robert Peck speculated in Investors Business Daily Monday as SunTrust lowered its rating on Pandora stock to neutral from buy and lowered its price target on Pandora stock to 15 from 18. It was Pandora’s second price-target cut and rating downgrade in less than two weeks.
Peck said, “Near-term profits will be crimped by Pandora’s increasing investments. Pandora’s focus on new interactive service and international expansion require direct deals with labels that raise several risks: new deal economics, untested international markets and increasing competition.” He added that while last month’s CRB ruling was modestly better than expected, “Pandora will see higher content expenses, as the 2016 cost for ad-supported streaming came in higher than anticipated. Additionally, there is no minimum percent of revenue threshold (which potentially makes Pandora a more attractive acquisition candidate).”