Pandora Gains as JPMorgan Sees Cash Returns: Copenhagen Mover

Pandora A/S rose the most among Copenhagen’s benchmark stocks today after JPMorgan Chase & Co. said the Nordic region’s biggest jewelry maker may increase cash returns to shareholders.

Pandora rose as much as 2.3 percent to 241.20 kroner, making the stock the biggest winner in the Nasdaq OMX Copenhagen 20 index. The shares traded 2 percent higher at 10:04 a.m. in the Danish capital, with volume at 28 percent of the three-month daily average.

Pandora on July 30 raised its 2013 revenue and profit forecasts and two weeks later reported second-quarter net income that beat analyst estimates as sales of its charms soared. JPMorgan said today that third-quarter earnings, due Nov. 12, could be a “further catalyst to the stock” and repeated its overweight recommendation on the shares.

Pandora’s earnings report will confirm “the strong top-line momentum and solid profitability profile,” Chiara Battistini, a JPMorgan analyst, said in a note. “In addition, in light of the robust cash flow generation and capital structure policy in place, we deem the potential cash returns particularly compelling.”

Pandora, based in Glostrup, Denmark, may report third-quarter net income of 417 million kroner ($75.9 million), according to the average estimate in a Bloomberg survey of five analysts. That compares with net income of 380 million kroner a year earlier. The company has beat analyst net income estimates in 10 of the last 11 quarters, according to data compiled by Bloomberg.

Investor concern that Pandora’s biggest owners, including private-equity company Axcel, may sell a large stake could pressure the share “in coming weeks,” Battistini said. “We would see any stock weakness and/or pull-back post placement as an attractive entry point,” the analyst said.

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