While Tesla Motors has stolen the spotlight this year for growth and stock volatility, investors in another unique car company have been quietly and steadily rewarded.
Tata Motors (NYSE:TTM-Free Report) shares are up roughly the same 35% year-to-date as TSLA (as of Wednesday 5/21), but with far less volatility. A 41% earnings surprise for their December quarter (3QFY13) helped the outlook as sales in the British Jaguar Land Rover unit grew 23%, with demand for their luxury vehicles increasing in China, North America and Europe.
This made the stock a stock a Zacks #1 Rank in February after the report and my colleague Neena Mishra chose Tata for her Bull of the Day on March 6, where she remarked on the company's key acquisition six years ago...
"Tata Motors had acquired both the Jaguar and Land Rover brands from Ford Motors in 2008 and turned them around into a major profit source. Management expects the sales and performance momentum for Jaguar Land Rover to continue with a richer product and geography mix."
This week, Tata earns back the top Zacks Rank as analysts hike estimates following record April sales for Land Rover at +28% year-over-year. This prompted Jefferies & Company to boost 2014 EPS estimates from $3.86 to $4.31 and next year profit targets from $3.98 to $4.42.
SurModics (Nasdaq:SRDX-Free Report) is a leading provider of surface modification technologies in the areas of biocompatibility, site specific drug delivery, biological cell encapsulation, and medical diagnostics.
SurModics partners with the world's foremost medical device, pharmaceutical and life science companies to bring innovation together for better patient outcomes. Recent collaborative efforts include the implementation of SurModics' Bravo drug delivery polymer matrix as a key component of the first-to-market drug-eluting coronary stent.
SurModics is also active in the ophthalmology market with a sustained drug delivery system that is currently in human trials for treatment of retinal disease. A significant portion of SurModics' revenue is generated by royalties earned from the sale of customers' commercial products.
Pandora Falls on Spotify's Paid User Growth
Pandora Inc.'s (NYSE:P-Free Report) competitor Spotify recently announced that its paid subscriber base has reached 10 million globally. Total subscriber base reached approximately 40 million. The news dragged Pandora's share price by 1.20% (30 cents), which closed at $24.73 on May 21, 2014.
In just a little more than 12 months, Spotify added 16 million total active users and 4 million paid users as it expanded its service to 28 new markets. In December last year, Spotify launched its free service for Apple's (Nasdaq:AAPL-Free Report) iOS and Google's (Nasdaq:GOOGL-Free Report) Android, which is a key reason behind its overall user base growth.
However, Spotify's active user numbers are expected to put Pandora under further pressure in the near term. Although Pandora's active user base ($76.0 million at the end of Apr 2014) is far higher than Spotify's, the latter's fast growing user base is a major concern.
Additionally, Apple's plan to acquire Beats Electronics will further intensify competition for Pandora in the ad revenue market. Pandora earns about 73.0% of its revenues from advertising and is relying on the revenue stream to offset its large content acquisition costs. Pandora grew its advertising revenues 45.4% in the first quarter to $140.6 million.
With an eye to enhance and diversify its revenue stream in the near future, Pandora is extending its footsteps into various new spheres. Recently, the company launched its new music recommendation unit called Promoted Stations.
The new unit will feature sponsor-branded listening stations whereby Pandora will receive some payments from these brands for advertising their respective stations. In Mar 2014, Pandora partnered with Peet's Coffee to create four branded stations that provide the soundtracks in Peet's stores.
We believe that promoted stations will work especially well on mobiles, which approximately account for about 80.0% of Pandora's overall listening and 74.0% of the company's last-quarter revenues.
Pandora's initiative of launching in-car advertising is a major positive in this regard.
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