Pandora Hits Record High as Goldman Says Shares May Double

Pandora Media Inc., the online radio service, rose to a record high after Goldman Sachs Group Inc. projected the stock has the potential to more than double in the next year.

Pandora climbed 11 percent to $36.53 at the close in New York, its highest price since it sold shares in June 2011. The stock almost tripled in 2013.

The shares may top $60 in the next year if Pandora doubles advertising, increases its mix of local commercials to half of all ads and leverages fixed content costs, Heath Terry, an analyst at Goldman Sachs in New York, wrote today.

“The next two years are critical for the development of Pandora’s long-term revenue trajectory and royalty rates,” wrote Terry, who has a buy rating on the stock.

Pandora is chasing the $15 billion spent each year in the U.S. on local radio advertising by opening sales offices in the biggest cities. The Oakland, California-based company is seeking to make its share of U.S. radio ads more closely match its share of radio listening, which was more than 8 percent last month. Pandora has said it runs less than 1 percent of U.S. radio ads.

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