Top ranked analyst Andy Hargreaves of Pacific Crest told clients to stay away from Pandora ahead of earnings, predicting poor profit guidance from the music-streaming company.
"We do not recommend owning P. We expect Q3 [third quarter] earnings to provide detail around the economic impact of the new on-demand service. This is likely to prompt a sharp reduction in medium-term profit expectations and reduced confidence in an acquisition, both of which could be negative for the stock," wrote Hargreaves, who rates the stock underweight in a research note Thursday.
Hargreaves' picks have a 17 percent one-year average return with a 59 percent success rate, according to analyst ranking service TipRanks, placing him in the top 4 percent of all Wall Street analysts covering any industry.
Here are the main reasons that could knock Pandora's stock: