What Wienkes Wants Before He Will Be Positive
I fully realize that many satellite radio sector followers are not appreciative of the opinion of Mark Wienkes of Goldman Sachs. Whether you like his opinion or not, at this point, it is important to know what it is. As we all know Wienkes issued a report in which he lowered his price target on SIRI to $1. What he also included in that report were the items that he wants to see prior to becoming positive on the stock. I will break down the items point by point, and interject my opinion. Because the forums have limited space in each post, this piece may take more than one post.
FIRST - The Wienkes List:
"We are waiting on a preponderance of the following items before considering turning positive on the stock:"
- sustained cost constraint as shown by Sirius in 2Q08;
- more tangible visibility into the OEM ramp with steady integrated conversion rates and stable churn;
- positive or stable and sustained ARPU momentum;
- improving retail sales;
- a significantly lower enterprise valuation;
- reduced risk of dilution related to cash flow and refinancing needs through 2009;
- more conservative consensus financial expectations for 2008-2010, and
- clarity on the timing and magnitude of proposed merger synergies
See next post