Analyst: How to Pick a Top Internet and Entertainment Stock in 2014

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If you ask Needham & Co. analyst Laura Martin, there are two companies in the Internet and entertainment sectors that stand out as potential winners in 2014: Pandora Media (NYSE:P) and Scripps Networks Interactive (NYSE:SNI). StreetInsider reports that Martin has chosen these two stocks as top Internet and entertainment picks for the upcoming year. Let’s look at them one at a time.

Martin has a Buy rating on Pandora with a price target of $33, which was set just ahead of the company’s November 21 earnings report. Although the stock saw some selling pressure following the report, the news was generally good, and even analysts with a Neutral rating on the stock – like Michael Pachter from Wedbush Securities – who were underwhelmed by the outlook agree that the core business is growing.

Martin argues that the biggest driver for Pandora in 2014 will be mobile and whether the company can monetize it. In a note seen by StreetInsider, Martin writes: “The premium afforded to solving the ‘mobile monetization puzzle’ is well deserved, in our view, because the ability to monetize on mobile devices raises the option value on global revenue streams, since much of the world’s access to the internet is via smartphones. Global revenue stream optionality elongates the visible revenue growth trajectory of a company, and raises the ultimate payout potential of the option.”

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