The Bull And The Bear Weigh In On Sirius XM
It seems fitting that after Mel Karmazin’s speech at the Merrill Lynch Media Conference that the first two analyst reports issued come from the opposite ends of the spectrum. We have the satellite radio bullish outlook from Citi’s Tony Wible, and the bearish outlook from Wienkes of Goldman Sachs. This leaves all of the other analysts who fall between to issue analysis and reports. Getting the two extremes out of the way seems fitting.
CITI
The CITI analyst has been adjusting his price downward with each report issued, and the latest report is no exception. The new price target for Wible is $5.00, although the analyst still considers Sirius XM as “massively undervalued”.
As noted by Karmazin at the conference, the expected synergies of $400 million have now been bumped up to $425 million. While this would appear to be good news, it was offset by a weaker top line according to Wible. Wible also noted that he sees revenues weaker from softer subscriber metrics, and that investor fatigue has worn on the equity.
As the bullish analyst in the pack, Wible has now adjusted targets from $9.50 down to $5.00.
GOLDMAN SACHS
Wienkes, the analyst that longs love to hate, is maintaining his sell rating on the company. Of those analysts following the sector, he has been the closest to the actual performance. The main question is whether the price action is a function of apathy for the equity or whether Wienkes has a solid estimate based on metrics.
Wienkes report does not contain a lot of detail, and the analyst maintains his sell rating because of lower subscriber estimates, as well as the upcoming financing for the company. Wiekes also notes that part of his rating relates to investors “show me” sentiment, which is a subjective measure of performance. This subjective aspect of the Goldman analysis is new in their reports.
Personally I would agree that there are many on the street who are in a “show me” mood. This could leave Sirius XM with upside potential if Mel Karmazin is sticking to his typical mode of under-promising and over-delivering. The big question is whether Sirius XM can over-deliver. For investors, this could mean waiting for the Q3 2008 financials to hit the street.
As I expected, Karmazin did indeed outline more detail, but it would appear that the street still wants more. This has the equity trading at new lows, and adds to the frustration level of sector investors. Sirius XM is at the mercy of short term traders. Long term investors have little to defend their position because the sector has been so embroiled in turmoil for well over a year.
With analyst estimates carrying a low of $1.00 and high of $5.00, there is a lot of room for varied opinions. Expect most other analysts to fall in between these estimates, and this equity to trade on near term speculation rather than long term until the third quarter financials and financing are outlined. There would seem to be some indication that Sirius XM will address the financing sooner rather than later. If this happens, one of the main overhangs on the stock will be removed. Whether the removal of such an overhang is enough to sole investor fatigue is yet to be seen.
Position: Long SIRI
Tyler, Thank you very much for your posting. I am still reading from time-to-time that the best way for this company to get ahead of the game is to declare bankruptcy. I do not believe that Mel would allow this to happen. The other option that now seems to be more of a possibility is for the company to be sold. Do you believe that either of these possibilities is truly realistic so soon after the merger? In addition, I do agree that the question of financing the debt that will come due next year needs to be addressed as soon as possible and maybe with a new president, positive economic expectationary forces will allow for improved re-financing opportunities. Thank you in advance for your thoughts!
Battle fatigue is an UNDERSTATEMENT! At this point, I feel like I’ve stormed the beaches of Normandy everyday for nearly 2 years straight!
I’m so tired of being cut to ribbons by German Howitzers it’s friggin RIDICULOUS.
Medic!!!!
Citi is a laughing stock in financial circles while GS is highly respected and has been by far the most consistently accurate in the Siri saga… yet, you remain long on Siri and pose these views as if they are credibly opposed?
Does anyone care that Wienkes has a conflict of interest with some of his ties? Mel hinted at this on Cramer’s show. He should come out and just say it. There is no reason for this company to be valued this low. It is the second biggest radio company. It is the second biggest subscription based company. It has nearly 20 million subscribers, great talent, no competition, great leadership, ect.
The best thing Mel can do at this point is keep his mouth shut and run the business. He is perceived as a slick willy used car salesman and is a turnoff to the investment community with his crass, sarcasm and curse words. He ties Stern to every mentions of potential or success of the company and the majority of high flyers are not into the Stern style. Siri and Mad Money have a lot in common as they both have entertainers as a leader. Mel has done a lot for the company, at least that’s what he tells us. Mel has got to go, either a resignation or take a step back from the investment community and let someone with clout and perceived respect take it from here.
You mention that CITI was at 9.5. I thought they were at 6.5.
Plowdog , get you’re head out of you’re ass.
Goldman Sachs is respected ?? They are hated
and despised by everyone on wallstreet with
the exception of their former employees working at CNBC.
The fact that GS has not backed up their
bogus $1.00 price target with any details makes
them nothing more than a YAHOO TYPE BASHER
who is short the stock.
Citi WAS at 9.5 much earlier in the year before the merger was approved. I remember that very clearly.
Still…$5 ain’t too shappy when ya think we are at nearly a BUCK! Thats practically a 5 bagger!
Back when they were saying $9.5 we were in the 3s. Which was a respectable but lower 3 bagger.
So in a way…it’s really an UPGRADE from the $9.5 prediction if you ask me. 🙂
I too worry about Mel taking this company to bankruptcy. Have most of my life savings riding on this. Averaged around 2.50. Ouch. My stupid greed, not blaming anyone else. Can’t imagine they would do this so soon after the merger but what are your thoughts? The economy sure isn’t acting in our favor. A little scary!
Tyler, Steve, and Sailboat: Yes, Tyler, speculation and EVENTS are driving the SP, and will continue until rearward technicals reflect a fundamental turnaround and forward momentum to the upside. I said before that I quit analyzing and instead relied more on event based news and information (including tons of if from this blog). Steve, SIRI for now remains a speculative play and yes, there is a risk that bankruptcy could occur. Short of that and the hostile takeover risk (good post above) the company and stock may still continue to tank (all time weekly low at 0.39 in week of 3/3/03, if my charting tool is accurate. I have read posts mentioning the all time daily low in the 30 cent range, but my tool only resolves down to daily going back five years.) Sailboat, if you checked Mel’s history you might retract or at least lighten up on him. I’m not now but was an executive in a high-tech manufacturing company. The pressures you get subjected to in no get offest by a six- or seven-figure salary. Could Mel have been venting? Probably, some. Are any of the SiriusBuzz bloggers inside the company? I would like to know. Knowing what is going inside is of great value. Having at one point worked inside a recently merged entity I know what it is like. Mel has a monumental challenge both inside SiriusXM and with regard to company performance vis a vis analyst and investor expectations. Long SIRI.
.99 cents was hit
Question, is Mel the right guy to lead this company?
HOLY SHIT! 99cents. That was some scary shit! I had visions of 50cents when that happened.
At some point, someone on Wall Street has to stand up and say THIS IS RIDICULOUS right?
I know Wible from Citi said it was MASSIVELY UNDERVALUED…and that was when it was much higher!
But as it goes BELOW a buck…COME ON….how can a company, the 2nd largest of its kind, with great forward growth potential and a viritual MONOPOLY in its sector be hammered like this?
When will Wall Street say ENOUGH?! THIS IS OUT OF CONTROL AND WAY TOO UNDERVALUED!!??? WHEN??
A. I told you so.
B. I’m back in at a buck-even. With 25% more shares.
Brandon-
Good for you! In hindsight, I (and a whole lot of others) should have listened to you on this one!
Good job, Brandon. I did not have the balls to sell my 110,000 shares. My avg. is $2.63. I am hurting but have no choice but to wait it out. Hopefully, with a happy ending.
Alrite, Brandon’s back, I want to see some more optimism, keep pumping these articles out and try to keep our hopes up.
Here…maybe this will cheer you up..
http://www.popeater.com/televi.....how/168334
Keep up the good reporting Tyler, and thank you for not bringing any technical analysis nonsense into the discussion.
Hey Brandon. Now that you’re back “in”…what do you think will be the trading range from here on out short term?
Just last week it was between 1.30 and 1.50….
what will it be now? 1.00 and 1.10?
I’m actually laughing right now. Don’t know if it’s nerves or shock…but this seems so surreal.
Everyone was looking forward to Mel’s infamous “POST LABOR DAY” speech like it was the second merger approval…and got bitch slapped….AGAIN.
I think at this point, it’s safe to say that ANYONE with half a brain is going to keep their expectations about this stock in careful check from this point forward.
It’s like the company and the stock have separated. I have just as much faith in the product as I ever have…and I think $1 for the stock is an INSANE steal…but I don’t expect much POP in the pps until STEADY SOLID PROOF OF PROFIT has been established.
At this point, I don’t even think a favorable refinancing of the Feb debt will move this stock. This has definitely become the POSTER CHILD of the SHOW ME STOCKS.
If they got that to play on the sirius monitors I’d bet we would get more subscriptions.
friggin…
at this point I have no idea. There may be more downside still. I just put it in my mind that I would buy at 1.00 no matter what to save the 20%.
When dealing with low priced stocks, small moves can be big percentages.
There is no support anymore. We need to trade sideways for a while to find it…
Q3 is expected to be bad. Q109 brings debt problem. Mel lowered guidance for 2009.
No real reason to own the stock, except for a visionary. I beleive that offering the NFL and Stern on XM will bring in a lot of subs from the xm side. That’s why I still want a foot in the door.
on Yahoo Finance, the bid and ask volume is flashing by fast, but in very small share amounts (a few hundred or a few thousand). Would this indicate that it is individuals, not the big boys, who are trading this right now – with the institutions not flinching?
Any insights?
I just bought another 500
Thar she blows!!! .95, .93, .90…
Could it be possible NAB has a bucket of money that is set aside for shorting the snot out of this stock at any and all opportunities just purely to attempt to bankrupt the company? I am sure they would have channels to shield any direct link.
I’ve got a theory that I hope never comes to light:
Mel has said time and again that there will be no reverse split. Have any of you wondered why he was negative when he spoke of future 20008 and 2009 subs.? Why he “inadverdantly” lowered guidance and caused the pps to tank?
Suppose the price stayed below 1.00? Mel would have to do a reverse split in order to maintain Nasdaq listing. I’m sure he will be very, very sorry for all of us, but his hands were tied and he had no choice.
Mel is a slicked up used car salesman and will surely screw retail investors if it came down to it. I got out without a loss on this tank, and accumulating now under a buck, but have a very itchy trigger finger and trust Mel as far as I can throw him
I’m averaged down to 1.50 and holding…. Good move Brandon, and welcome back. This is is a better mystery than any whodunit. Hell, just the suspense and anticipation is worth the price of admission at this level. We need “eyes out” for any clear indicator that the stock will flatline and for even the most hushed qualified whispers about hostile takeover. Otherwise, lean forward in the foxhole and keep your finger on the trigger.