Sirius XM was the recipient of some good news this morning in the form of an upgrade from Janco Partners. Analyst Martin Pyykkonen moved Sirius XM equity from "buy to "accumulate" with a new price target of $1.30 base on 12 times the 2011 EBITDA estimates.
Among other items, Pyykkonen sees auto sales coming in line with Sirius XM guidance at just over 10 million cars sold this year. Given a 60% penetration rate, this would represent 6 million satellite radio equipped vehicles The analyst does mention video in the report, but it is something in the longer term, and in my opinion, not relevant to the current upgrade. The fact is that the video services currently offered by Sirius XM account for very little in terms of garnering subscribers, as well as the bottom line, and I do not see the company going much further with such efforts until much later.
Janco also notes some bear indications such as the reverse split, and major content issues that are up for renewal.
Position - Long Sirius XM Radio