CITI Report Explained
With the report issued by CITI today, some confusion ensued as to what the report represented in terms of XM Satellite Radio. Some saw the report as a downgrade because the rating on XM is now a hold. The price targets for XM and SIRI in the report represent differing timeframes.
Specific to the merger, the $12.25 price target has been established in the near term and at the time of merger approval (which they believe is due soon and has a 70% chance). Once completed, the XM stock would be converted to Sirius shares. Thus the near term target for Sirius is $3 and XM is $12.25. Once the merger happens, the long term outlook happens. This is where an $8 to $10 target is arrived at for SIRI (as a merged company).
As stand alones, the longer range target for XM is $9 and for Sirius is $2.25. Obviously, the analyst believes that the merger makes the sector more attractive.
Position – Long Sirius, Long XM
I agree with your explanation of the relative valuations and it was clear that was what the fool meant in the report.
But can you explain how in hell he can suggest, with a straight face, a combined 55 Million subscribers 3.5 years hence?
The guy is an idiot.
do you think after the merger siri will selL
I HAVE 5 SUBS IN MY LIMOS~~ LOVE IT??
BOSSONE