Over the past few weeks Sirius XM has made some substantial moves in stock price. As of Friday's closing the company is right at the price targets most analysts established for this time next year. There is little doubt that Sirius XM is executing well. Nearly every analyst, even the most bearish, acknowledge this. Sirius XM is e few weeks from reporting their Q3 numbers, and it is for this reason that analysts are in a bit of a quandary.
Analysts such as BGB's Murray Arenson have adjusted his "BUY" to a "HOLD" while raising his price target. Some Sirius Investors get frustrated with such actions. The reasoning behind Arenson's move is simple. An equity needs to have at least a 15% upside for Arenson to rate it a buy. Without Q3 numbers to look at how prudent would raising a price target to $1.75 be? Without news on Howard Stern, does it make sense to see continued upward movement. Arenson is simply not putting the cart before the horse. He outlines a bullish situation, but in the end allows investors to determine their risk tolerance.
Other analysts remain positive on company events, but seem to be hesitant to raise their target at all. Personally I believe that there is currently an argument that the stock is "overbought" and that current pricing has some of the Stern news anb Q3 news baked in. I have long believed that Sirius XM needs several consecutive quarters of solid performance to gain the respect and a change of attitude from analysts, the street, and even investors. Given the way Mel Karmazin runs this business, I would lean toward him being a success, and thus remain bullish. The flip side is that after the numbers come out that we can see a re-tracement. The best thing for investors to do is to have a strategy in mind now to deal with the price movements over the next three weeks.
At this points analysts need to issue updates in some form. However, there are big factors yet to come in the next three weeks that will give their real sentiment based on the financial and subscriber metrics that matter. For this reason do not look for many assumptions on the part of analysts. Very soon they and everyone else will have real numbers to digest. These real numbers will tell more of the Sirius XM story, and by extension how bullish or bearish we as investors should be.
The analyst reports that really matter are the ones that will come out after the Q3 numbers are released. At this point no analyst is being very aggressive, and a couple are being ultra conservative. The tale of the tape will come out early in November as everyone listens to what Mel Karmazin has to say.
Position - Long Sirius XM