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