Pandora Media Inc (NYSE:P) still a good buy say analysts

Online radio service provider Pandora Media Inc(NYSE:P), is still considered a good buy by analysts due to its rapidly rising subscriber base.

The company’s third quarter performance, though strong, lagged analyst estimates.

Canaccord Genuity said that investors who stayed invested in the company will be rewarded for their loyalty as its strong user base could be adequately monetised.

Pandora's chief executive Joe Kennedy said that the company was more likely to be affected by the U.S. fiscal cliff than others since its fourth quarter ends on January 31. He was justifying the weak guidance put out for the fourth quarter.

On Wednesday shares in Pandora fell about a fifth as its third quarter earnings disappointed the Street, though revenues rose 60 percent to $120 million and profits were ahead of estimates.

Canaccord's Michael Graham, cut his price target for the Pandora stock to $12 from $16 a share but maintained his bullish stance on the company on account of its growing user base.

Pandora saw its active listeners grow 45 percent to 62.4 million by the end of November, or 7.1 percent of total U.S. radio listeners; listener hours have grown 67 percent to 3.56 billion hours.  While advertising revenue has surged 61 percent to $106.3 million, subscription revenue is also keeping up, gaining 52 percent to $13.7 million.

Mobile revenue grew 112 percent to $73.9 million, or more than 60 percent of total sales.

The only snag for the company is its high content acquisition costs. In the third quarter, Pandora had to pay $65.7 million for its content.