Analyst upgrades and improved fiscal 2013 guidance pushed shares of Pandora Media as high as $12.43 Thursday before ending up 14.3% to $11.52. Trading was heavy at 40.6 million shares versus a daily average of 2.8 million.
The market was reacting to Pandora's fiscal second-quarter earnings release on Wednesday. Analysts overlooked the stubborn content acquisition costs they used to bemoan while mostly buying into Pandora executives' well-sold argument that the company is turning the mobile corner.
Among the most optimistic was the Canaccord Genuity analyst that upgraded Pandora from "hold" to "buy" and noted "potential upside stemming from higher mobile monetization and possibly from moderating content costs." The firm raised its price target to $16 from $13.
In its note to investors, the analyst at Albert Fried & Company noted the 30% upside to its $13 price target (which has since nearly evaporated), reiterated its "overweight" rating. A Barclays analyst was less impressed, noting that ad revenue was less than expected and setting a $9 price target.
The intraday high of $12.43 was Pandora's highest price since it peaked at $14.65 on March 6. After the end of trading, the company established its fiscal 2013 guidance of revenue of $410 million to $420 million and a net loss per share range of ($0.11) and ($0.16). Investors had expected better and adjusted shares accordingly. Even though Pandora has shown only modest mobile progress and now pays out roughly six out of 10 cents for royalties -- up from five out of 10 cents a year ago -- the market is pleased.