Merrill Lynch analyst Jessica Reif Cohen issued a report today on Sirius and is bullish about the sector. Cohen, a media analyst is highly respected in the field, and likely offers insight from a media perspective. Of note, in the late 90's, Cohen once called a stock price of $50 for CBS when it was trading at $18. One year later CBS surpassed the $50 mark.
Cohen sees the OEM channel as a growth story for SDARS and states in her report, "satellite radio is well on its way to becoming standard in new auto production." She projects that installations will climb to 50% in calendar 2008 and to 85% by 2013, thereby yielding double digit growth despite plummeting OEM sales. Cohen notes that while sales of cars will be down in the neighborhood of 14% in the next couple of years, that a 66% growth in installations will still be a NET positive for SDARS.
Cohen maintains a BUY rating on Sirius and is raising the P.O. to $4.50 from $2.70.
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Tyler Savery Position - Long Sirius, XM