Why Pandora Media Inc Stock Popped Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What:Shares of Pandora Media Inc jumped as much as 10% early Friday following a positive analyst initiation and reports of impressive local ad growth.

So what: First, Rosenblatt Securities analyst Martin Pyykkonen initiated coverage on Pandora stock with a "Buy" rating and price target of $20 per share. To explain his reasonsing, Pyykkonen says his research shows Pandora is "effectively selling radio ads" with its growing sales staff. At the same time, Pyykkonen stated increasing penetration of Pandora in auto infotainment systems "should be an upside driver for Pandora, especially for local radio ads."

Separately, the results of an OTR Global survey focusing on 17 U.S. ad agencies seemed to agree. Specifically, OTR found that not only did local ad spending jump 90% year-over-year in the fourth quarter, but also that all the agencies it surveyed are planning to "significantly boost" their Pandora ad spend in 2015.

Now what: That would be great news for the music streaming specialist, which is slated to release fourth quarter results on February 5. Analysts, on average, are expecting revenue to grow 37.5% to $276.2 million, which should translate to earnings of $0.18 per share. That's roughly inline with Pandora's guidance, which calls for revenue of $273 million to $278 million, and earnings per share between $0.17 and $0.19.

Whether Pandora meets or exceeds those ranges remains to be seen, so be sure to check back here at Fool.com on February 5 to see how it fares.

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The article Why Pandora Media Inc Stock Popped Today originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Pandora Media. The Motley Fool owns shares of Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.