Napster initiated with "neutral"

08/30/06 - D.A. Davidson & Co.

NEW YORK, August 30 (newratings.com) - Analyst L Alan Davis of DA Davidson initiates coverage of Napster Inc (NAPS) with a "neutral" rating. The 12-month target price is set to $4.

In a research note published yesterday, the analyst mentions that the company has recently launched a free web-based music service, which is expected to cut the cost of customer acquisition. Napster’s early results indicate that although the company has substantially raised the scope for advertising revenues and traffic to the site, the longer-term effect on its paid subscriber base is still unclear, the analyst says. The company now appears to be focusing on reducing its cash burn, DA Davidson adds.