Morgan Stanley's David Swinburne upgraded Sirius XM from a not rated status to overweight and established a $2.00 price target. The basis for their rating is that the firm believes that free cash flow will accelerate and the Sirius XM could show a potential return of capital in 2012 or 2013. Swinburne believes this could increase institutional participation in SIRI. Morgan Stanley sees EBITDA growth of 10% to 15% now through 2015.
In addition to the items noted above Swinburne likes the rebound in the auto sector and sees it being a major contributor to company performance over the next few years. Swinburne set a base case price target of $2.00 and established a bull case and price target of $2.50 if auto sales can hit 14 million in 2011.
Position - Long Sirius XM Satellite Radio