Pandora stock dips despite earnings beat

Investing.com -- Shares of Pandora (CSE:PNDORA) dipped on Tuesday despite reporting slightly better-than-expected second quarter results and raising its FY24 revenue guidance. 

The company reported second quarter revenues of DKK 6.77 billion, which was 2% ahead of consensus, with organic revenue growth of 15% slightly surpassing expectations. Same-store sales (LFL) growth was in line with consensus at 8%.

At 3:25 am (0725 GMT), Pandora was trading 3% lower at DKK 1,009.5.

Pandora's Group EBIT came in at DKK 1.34 billion, representing a margin of 19.8%, which is 3% ahead of consensus. This was largely driven by a gross margin beat, which stood at 80.2%, exceeding the consensus estimate of 79.2%. 

Despite the solid quarter, Pandora upgraded its FY24 revenue guidance to 9-12% organic growth from the previous 8-10% estimate, though this remains slightly below the current consensus of 11.3%, said analysts at Jefferies in a note.

The updated LFL growth outlook of 5-7% and space expansion of 4-5% are aimed at offsetting challenges from foreign exchange fluctuations and higher silver prices, Jefferies added.

“However, if the macro softens from here, we would expect to see downward pressure on its trajectory. From here we remain cautious given strong 2023 and 2024 YTD share price performance, and less supportive valuation in our view,” said analysts from RBC Capital Markets in a note.

RBC Capital Markets maintains an "Underperform" rating on Pandora with a price target of DKK 920, while Jefferies maintains a positive outlook based on the company's expected earnings per share (EPS) of DKK 73.3 for 2025, suggesting a potential price target of DKK 1,150. 

However, the risks associated with consumer health and economic conditions remain pertinent factors for the company's stock performance.