Why Microsoft buying LinkedIn is good for Pandora

Larry Busacca/Getty Images for Columbia Records

Microsoft's monster acquisition of LinkedIn on Monday has analysts looking at other potential M&A targets in the tech space.

Two that have jumped out are Twitter and Pandora, which have both built large user bases but whose shares have been under pressure recently. There have been rumors on and off that Pandora could be for sale, and last month activist investor Corvex demanded the company sell itself. CEO and founder Tim Westergren, who returned to the CEO spot in late March, has repeatedly said the company is not for sale.

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But even so, the recent LinkedIn acquisition is good news for Pandora, according Albert Fried & Company. "This recent on-the-run M&A transaction should translate well to Pandora shares in our view," analyst Richard Tullo wrote in a note on Monday. "Pandora on some metrics such as monthly users and minutes per users compares well to LinkedIn."

Here is a comparison the two companies Albert Fried put together:

Albert Fried

Albert Fried has a $16 target on Pandora (the stock is currently sitting at less than $11), and thinks "Pandora shares are attractive and fluctuations could provide even better entry points."

Pandora has been cited as an attractive acquisition target in the past. The streaming music company appeared on a recent Goldman Sachs ranking of the tech companies most likely to get acquired in the next year.

Under Westergren, Pandora is a company on the brink of a radical transition.

Two high-profile acquisitions last year showed Pandora's ambitions to break beyond "internet radio," with a particular interest in on-demand streaming, which would put it into more direct competition with Spotify and Apple Music. Pandora in November bought key assets of the embattled streaming service Rdio for $75 million, and the company has said these are critical to its plans to move into the on-demand arena.

Pandora's stock is down a little over 1% in trading on Monday.