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Sirius XM Radio Analyst Roundup

by: Tyler Savery August 10, 2008 | about stocks: SIRI    

Tyler Savery

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With the Q2 2008 conference call of SIRIUS XM Radio (SIRI) complete, analysts are beginning to weigh in on the prospects of the merged company. As expected, there are both bearish and bullish outlooks, with a smattering of opinion that goes right down the middle. The merger is new, and analysts are applying differing valuations and even models as they look at the companies.

JP MORGAN

Barton Crockett of JP Morgan has given a slight upgrade to SIRIUS XM Radio. He moved his outlook from “Neutral” to “Modestly Positive” after seeing the financials for the stand-alone quarter and listening to the Tuesday conference call.

STIFEL

Stifel analyst Kit Spring had previously expressed that the pre-release of numbers by Sirius was mostly in line with their estimates. After the full release, Spring still sees a “Buy” rating on SIRIUS XM Radio with a price target of $3.00. Spring notes, “Our core reason for sticking with buys on SIRI despite the somewhat disastrous refinancing of XMSR’s debt, is that we think the stable self-pay churn (1.6%) in 2Q and OEM conversion (50% combined) statistics point to the consumer still liking the product. Especially in light of a weak consumer, increased penetration of lower-end new cars and cars with iPod/MP3 jacks. We continue to see $4.9B of present value of merger synergies with expected cost cuts on virtually every lien item.”

GOLDMAN SACHS

Goldman analyst Mark Wienkes, who has been critical of satellite radio, maintains his bearish outlook. Wienkes stated, “Sirius’ 2Q08 results offer encouraging early signs as to the potential for positive earnings down the road. Most financial metrics largely improved yoy, yet some core business metrics weakened.”

Wienkes points to consensus subscriber estimates as being too high due to rising OEM churn and weak retail demand, as well as capex needs and financing that he feels will reduce free cash flow to equity holders. The analyst also feels that a $7 billion enterprise valuation implies “flawless execution and a premium multiple even at today’s price.”

The analyst has placed a six month price target of $1.00 on SIRIUS XM Radio.

BARRINGTON

Barrington maintains an “Outperform” rating on Sirius XM Radio, citing that at current low levels, the stock looks increasingly interesting. The firm had anticipated a loss of 7 cents per share. SIRIUS XM beat Barrington's model by one cent.

RBC

RBC analyst David Bank expressed a desire for more detail and felt that for the time being, they should remain on the sidelines. Regarding the call, Bank noted, “The only real guidance SIRI has offered with respect to merger synergies is $400mm in 2009. We believe this will primarily consist of back-office, retail incentives, and advertising savings that could be realized near-term. But we’d like to see more specific line-item guidance from management on these assumptions as well as longer-term assumptions regarding content and OEM distribution savings, when, in fairness to them, they have had more of a chance to evaluate opportunities from “the inside”.

Bank carries a “Sector Perform” rating with a $2.00 price target.

CITI

Citi analyst Tony Wible is the more bullish analyst amongst the group. The analyst carries a price target of $6.50, citing that he feels guidance is conservative, “Best Of” programming will provide an ARPU boost, and that liquidity is not an issue.

More analysts will likely weigh in now, as they have had a chance to digest the numbers and evaluate their models.

Position - Long SIRI

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This article has 117 comments:

  •  
    Aug 10 12:56 PM
    Nice recap article Tyler, you do a good job of presenting the facts on SIRI. It is safe to say that even the "experts" really have no idea what is going to happen with SIRI. I find many posts by critics of the company unfounded given that this is new territory in a market with every bit as much long term potential as a Microsoft or Cisco. It is even more laughable to find the me-too analyst wannabes on many blogs, including frequent offenders on this one being self professed experts and holding themselves in such high esteem. Why are they still writing blog comments if they are sooo highly educated and clarvoiant I wonder, could it be that the only people that really have a game plan are the executives at SIRI, very likely. Are the executives at SIRI looking to cash in tomorrow, NO. They are building what is the direct competitor to the dominant player in the market, Clear Channel aka the NAB. It is likely that it won't be an overnight success but I'm putting my money, a lot of it continually, on the prospect of long term success. To those who sold short, there is still a sale on SIRI and you can get back in at a bottom floor price like the big boys in the institutions are doing.
    Reply
  •  
    Aug 10 01:08 PM
    Reviewing this article one can see such a big spead in price from one analyst to another, especially this fellow Wienkles from GS. Second biggest media company in the US and he gives it $1.00 buck price terget ? What a joke. But people need to know how much GS is loading on the stock prior to taking off. To me this is clearly an MM manipulation for the stock with a 26% shorting on an average.
    Mel Karmazin will appear on Cramer Monday 1:30 PM, I'm not an analyst but I have more brains than these guys who only see thing inside the box. My price target for the end of the next Holiday quarter is $ 3.65 IMO things will start happening after Labor day.
    Mel Karmazin is a hell of a CEO, I'm sure he has a line of products coming down the pipeline not just relating to cars.
    Reply
  •  
    Aug 10 01:58 PM
    The Company has been narrowng it loses QTR to QTR and now the cost savings from synergies and additional revenue of $4 from BEST Of alone should result in the company showing a 50% lower loss (at a minimum) than prior quarter.

    Any idea what percentage of subscribers the Company expects to subscribe to Best Of
    Reply
  •  
    Aug 10 02:00 PM
    unfortunately weinke has been right so far ......BUT , maybe Siri will go down to a buck before this is over .....that does NOT mean it will stay there , and what an awesome BUY at 1.00 ........also luckily the naked shorts are being exposed as trying to sabotege companies , so I think Siri may skid through without disaster ...I think there has been some intense efforts to sabotege Siri into bankruptcy ( just my opinion ) ...but I don't think they can pull it off now ....too much heat on the naked short scams now .....I think weinke in a way is a self fulfilling prophecy ....he dooms Siri , and people panic .......I think maybe all the analysts are right ....Siri MAY go down to a buck .....but it will be short lived and up from there back to 3.00 , then in a few months ( barring any disasters ) start slowly crawling upwards with lots of profit taking on the way ( lots of volatility )...but a general up tick after a few things get settled down , and some good financials come out .....it's all about generating some cash flow towards the positive now I think ...one or two cents at a time .......maybe the shorts are so greedy 1.32 isn't a good enough price to go long , so they'll try to drive the price down as far as they can , and then change positions ....hell whadda I know ......well I'll tell ya what I know , I know there are some cut-throat MF's out there on Wall Street !!!!! And Siri is the perfect stock for them to make a KILLING on if they can short it down to a dollar and then go long to run it up to 3+
    Reply
  •  
    Aug 10 02:19 PM
    This is my speculative play for the next year or two. At a little over a dollar the risk is low compared to the possible reward, and despite the efforts of Congress and the FCC to push it into bankruptcy. it is one of the very few low value stocks that has good management, and a viable business.
    Reply
  •  
    Aug 10 03:03 PM
    ARI D K -- Have you studied the financials more extensively than the Goldman analyst?
    Reply
  •  
    Aug 10 03:45 PM
    Good article. GS is taking the low road for many stocks now, I guess they don't want to risk looking at upside. Myself, this is a $4.00 stock by year end as soon as the cost savings become reality, and don't look for that to take too long. There is a lot of duplication that can go in the next 60 days and I expect to see the announcements fly in the coming weeks. That should drive the stock price, and make GS look like the gutless fools that they are!
    Reply
  •  
    Aug 10 04:33 PM
    $1.30 to $1.00 is a big loss. Only a fool would buy or add more.

    Mel has not done anyone, any favors.
    Reply
  •  
    Aug 10 04:37 PM
    Still not a hint of capitulation in Sirius.

    Capitulation will likely not occur until these daily pumps by Tyler are met with no replies. (or at least not 50+)

    Either that or bankruptcy for true capitulation.

    We shall see....
    Reply
  •  
    Aug 10 05:08 PM
    SIRI can only be held back for so long before the rat race to cover will begin and there's a lot of money on the sidelines that will come into play if the price continues to fall. Expect some Form3s as some big players step up to the plate during the next 30-90 days. Satellites in the sky are big feathers for the caps of people you would never expect.

    Thanks for the summary and updates.

    Disclosure: Long
    Reply
  •  
    Aug 10 05:26 PM
    All great points Tyler but SIRI is a dead stock until it can show any sign of profitability. Any investor following your articles about SIRI/XMSR for the last 2-3 years would have lost everything!

    How much more pain one can take in this one?
    Reply
  •  
    Aug 10 05:53 PM
    An investor only looses when they walk away from the table and accept a loss. Anyone that thinks the stock fairy is going to keep their position positive is a bit naive. If a person were to walk away at say 2.5 and have lost from a position of 7 that person would be just what the big short-sellers are looking for an impatient sucker that trades on short term gut reactions, but if that person still thought that the fundamental product of SIRI was going to prevail in the end, they could jump back in to the amount they bailed out on at a major discount at 1.38. Can you say, "If I multiply shares I make money on small stock gains" and "losses are only losses if I let them be so" ? It could go to a buck, so what, it is a temporary paper loss unless that person were to be short-sighted enough to again sell at a loss in which case that person doesn't belong in this or any other stock, they belong at a Casino.
    Reply
  •  
    Aug 10 07:32 PM
    I knew Wiener, Wanker, Hotdog or whatever his name at GS is will give Siri a low price. Wow now watch the stock price drop like a rock on Monday.
    Reply
  •  
    Aug 10 07:58 PM
    Seeking Alpha is just picking this article up now. Wanker, GS caused the stock to drop Friday. If longs hold on to their shares to fend off the attack by the "Big Houses" they'll enjoy the ride up when, all of a sudden, Mel's a genius and this stock has cleared the way for a profitable future.
    Reply
  •  
    Aug 10 09:32 PM
    Vicar, sorry to say that do you mean rest of the five analyst are wrong?
    Reply
  •  
    Aug 11 12:29 AM
    I believe that whinny has lost a lot of money on siri/xm and now he is downgrading the stock to make up for some of his mistakes, because he sees huge growth potential for the new sirius xm. Maybe after he finally gets his new position built up. he will give the stock a strong buy rating. This is how these crooked fu....s work. This is my stong opinion and I think the stock will be worth at least $20 with 2 to 3 years.
    Reply
  •  
    Aug 11 12:36 AM
    Question,

    Why would GS and others have to lower the price some more if it's already so low?

    If shares of Siri will rise lets say up to $10 or 20, can't they still buy at 2 or 3 dollars a share and still make a killing?

    Why drag it down so low?
    Reply
  •  
    Aug 11 12:48 AM
    Ok.. Harleyguy is here to say Sirius XM Radio is here to stay ! Be ready for the pop..
    Reply
  •  
    Aug 11 12:50 AM
    Answer,


    To make off with a large amount of money within two or three months, because he knows the stock will not stay this low. I agree the stock is already low, but why not sink it more and sell in two or three months when he/they strike a 200% gain. Just my opinion.
    Reply
  •  
    Aug 11 12:51 AM
    Remember, Weinkes is merely predicting what, in his own opinion, the stock will do in the near term (which unfortunately could well fuel the prophesy), not its value. Cramer will do likewise. Nothing negative has happened to the company (in fact, just the opposite) since the merger, when the prediction of a $1.50 price (again, not a value) was announced, which no doubt was partly aided by the shorts. If you believe that a market driven economy will eventually win out, however, forces well beyond those that are emotionally driven by (or are eager to take advantage of while the gettin's good) the Weinkes of the world will eventually set a more realistic price range, and it will be much higher than we are going to experience in the short run. Meanwhile, drive yourself nuts and follow the stock on a minute by minute or even day by day basis.
    Reply
  •  
    Aug 11 12:52 AM
    Good question Chapter 11. I guess following reasons.

    1. They do not own any shares
    2. They do not foresee the future and still feel the co may go bankrupt
    3. They have some personal interest or enimity
    4. They cannot be sued for misleading the investors if the price touches $5 after the festival season results.
    Reply
  •  
    Aug 11 01:25 AM
    Thanks all for your input !
    Reply
  •  
    Aug 11 02:01 AM
    cinch them belts up tight and hold on,after a few more laps it'll be a nice ride. the best vehicle to be in is long, the shorts will run out of gas and the long will take the checker. look at it this way, winkes gave us another oppertunity to add .
    Reply
  •  
    Aug 11 10:04 AM
    Stay with the Big Blue Dog............ he is tearing the asses off of the shorts. Have patience, it will take some time, but he's voracious. Long Siri!
    Reply
  •  
    Aug 11 10:16 AM
    what does tyler know, you guys already know?

    cramer does no good with his flip flops either.

    just don't buy or sell,hang inthere for a while longer.
    Reply
  •  
    Aug 11 10:32 AM
    I wouldn't bet on Tony Wible's prediction, he said blockbuster was gonna go to $8.50, he seems like an idiot
    Reply
  •  
    Aug 11 10:43 AM
    Do not 'Loan' your shares either. This stock is being manipulated by short sellers. Charles Schwab sent me a request to borrow my shares. When I called and asked why, they said they just had some clients who wanted to borrow them. When I brought up shorting them they finally said their clients wanted to short them, but said they could not be sure shorting the stock would bring the price down. I called bullshit on that one. Nowhere in the document did it say they wanted to short the shares. Call your broker and make sure they understand that you will sue them if they loan your shares to short sellers.
    Reply
  •  
    Aug 11 10:46 AM
    chapter 11 - the reason 1.38 is not good enough for the investment banks , and they want to drive it down to 1.00 is because they are the greediest MF's on the face of the earth ....when you invest 200 million dollars , 38 cents is a LOT of money per share ....when Siri reaches 7 , the difference would be making 700% as opposed to 500% , if you buy at 1.00 instead of 1.38 ( or I guess 600% vs 400% , since you have to subtract principal ) but the difference is huge , and I think if weinke would shut his trap Siri would not go down to 1.00 , but he sort of drives it down with his damned forecasts ...a self fulfilling prophecy .
    Reply
  •  
    Aug 11 11:08 AM
    The stock has had more downside than any of us who have studied this company, SIRI, and XM before the merge, ever expected. This IS what you read and hear about when you hear folks talk about BEAR attacks on a company. The company's numbers always show a better picture than where the Shorts / Bears take the stock price before building it back or in the rare occasion, taking it out (bankruptcy). It is not a surprise that Weinkes, GS is so negative. He always has been and will until company posted profit hits him in the face. Goldman an he seem to be leading the charge, and with a heavy RETAIL Investor base, Cramer isn't helping at all. Cramer is also a Goldman Sachs, bought and paid for, "Friend". The potential upside is enormous, the downside now is very limited. If the small retail investor falls prey, no one will notice. All I'm saying is don't become prey.
    Reply
  •  
    Aug 11 11:27 AM
    all tyler does is PUMP sirius DAILY and its been falling within the context of a LONG DOWNTREND, with the exception of sporadic spurts..end result: its been on a multi-year FALL
    Reply
  •  
    Aug 11 11:34 AM
    HOW DOES TYLER KEEP WRITING ABOUT SIRIUS AFTER CRIPPLING ALL OF US WITH 80%+ LOSSES?? IVE READ ALL READERS POSTS AND EMPATHIZE WITH THEM AS ITS TRAGIC FOR INVESTORS TO BE SADDLED WITH THESE HORRIFIC LOSSES AS A RESULT OF A A WRITER WHO HAS NO INKLING OR IDEA OF THE STATE OF AFFAIRS OF THESE COMPANIES..WHAT A DIABOLICAL MISDEED TYLER HAS INFLICTED UPON US
    Reply
  •  
    Aug 11 11:44 AM
    euro9908 not again, please contribute something constructive or go to your room and don't come out until your ready to play nice.
    Reply
  •  
    Aug 11 11:48 AM
    cos1000, good comments.

    Remember Buffet comments, if you believe in business model and management is good then invest otherwise sell your share.

    Long SIRI.
    Reply
  •  
    Aug 11 11:49 AM
    euro9908 i s this your new name? are you realy someone else in disguise? i can tell by the way you type (all caps) and your adolescent style of writing
    Reply
  •  
    Aug 11 11:49 AM
    How many times are u gonna change ur name and write a bout 80% losses in all CAPS
    Reply
  •  
    Aug 11 11:58 AM
    I AM A NEWCOMER TO THIS BOARD BECUASE MY STATEMENTS COME IN TO MY HORROR, THE DIRE UNDERPERFORMANCE OF THIS COMBINED ENTITY HAS SERVE TO GORGE MY EYES OUT AT THE SOLE MACHINATIONS OF TYLER
    SO LET ME GET THIS RIGHT: YOURE NOT COMPLAINING ABOUT THE AUTHORS DISMAL TRACK RECORD ON THESE STOCKS BUT WOULD RATHER LAUD HIM FOR BEING TOTALLY IGNORANT ON THE TRUE POOR FUNDAMENTALS OF THESE COMPANIES?
    Reply
  •  
    Aug 11 12:01 PM
    MOSH:
    Aug 10 05:26 PM
    All great points Tyler but SIRI is a dead stock until it can show any sign of profitability. Any investor following your articles about SIRI/XMSR for the last 2-3 years would have lost everything!

    How much more pain one can take in this one? <- THANKS TO TYLER, MY ENTIRE INVESTMENT IN THIS STOCK IS SHOT TO HELL AND YOU SPEAK THE TRUTH WHICH I COMMEND YOU FOR AND ANYONE WHO SAYS OTHERWISE, IS AN APOLOGIST FOR TYLER AND HIS POORLY-RESEARCHED WRITINGS WHICH HAVE DEBILITATED US TO AN ALMOST 90% LOSS ON THESE STOCKS
    Reply
  •  
    Aug 11 12:06 PM
    euro9908 you are not new to this board. you are the same idiot uder a different name. go away! what is your name gonna be next week.

    how about ""Richard Cranium" can you figure that out EuroTrash?
    Reply
  •  
    Aug 11 12:09 PM
    CALLING ME NAMES SERVES US NO GOOD; WE ARE ALL UNDERWATER AND HAVE BEEN INFLICTED MONSTROUS PAIN IN NO SMALL PART THANKS TO TYLER. IF YOU WANT TO BE DEFENSIVE GO AHEAD BUT MAYBE YOU ARE TYLER UNDER A DIFFERENT NAME
    Reply
  •  
    Aug 11 12:11 PM
    calling you names is a lot more entertaining than your worthless babble. RIchard Cranium fits you well
    Reply
  •  
    Aug 11 12:16 PM
    CHICAGO I TRUST YOU HAVE NO POSITION IN THE AFOREMENTIONED STOCKS, AS A PASSIVE WATCHER-BY, YOU SHOULD NOT POST ANYTHING ON THIS BOARD BECUASE I MYSELF ALONG WITH OTHERS, HAVE MJUCH AT STAKE ON THESE COMPANIES. ACTUALLY COME TO THINK OF IT, YOU AND YOUR OTHER SCREEN-NAME TYLER AND HIS REPLETE-WITH-ERRONEOUS INFO-ARTICLES SHOULD JUST DISAPPEAR. LOSSES ON THE VERGE OF 100% ON THESE STOCKS ARE INNAPROPRIATE AND OUTRAGEOUS..WE DEMAND A QUALIFIED WRITER ON THESE STOCKS AND NOT SOMEONE SUPPOSEDLY QUALIFIED WHO CRUSHES OUR ENTIRE INVESTMENT
    Reply
  •  
    Aug 11 12:26 PM
    YOURE WRONG ON THE FIRST POINT AND ON THE SECOND POINT, PETTY INSULTS WILL NOT ACHIEVE ANYTHING; SAVE YOUR VENEMOUS HATE FOR TYLER, THE ARCHITECT OF THESE STOCKS IMPLODING RUNNING-ON ALMOST 90% FROM WHERE HE MUCH BALLYHOOED THEM
    Reply
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