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Pro Analysis

Top-ranked analyst: Sell Pandora, earnings to disappoint

A banner for Pandora Media, the online-radio company, hangs in front of the New York Stock Exchange.
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A banner for Pandora Media, the online-radio company, hangs in front of the New York Stock Exchange.

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: