Two days later and the analyst report by Lucas Binder is still getting press and has the bulls on Sirius and XM in a bit of a tizzy. What is amazing is that the call by Binder is actually pretty even keeled, and leaves the prospects of whether or not to invest up to you. This is basically nothing more than a stock market version of "YOU MAKE THE CALL".
What Binder did was nothing more than acknowledge that his price target on his April upgrade was within striking distance. He even went so far as to adjust that target upwards a bit. Given the new price target for Binder, it is not surprising that the analyst went from buy to neutral, after all, the stocks were both near those benchmarks.
Remember, Binders analysis and established price targets are based on these two satellite radio providers as individual companies, not a merged entity. Binder establishes other price targets for dealing with the merger, thus we are at a "YOU MAKE THE CALL" situation.
Binder places the merger odds at 50/50
If you believe that the merger stands a good chance of approval, Binder sees a price of $19 to $20 for XM and a price of $4.25 for Sirius.
If you believe that the merger will be denied, Binder sees a price of $10 to $11 for XM and a price of $2.80 for Sirius.
Whether or not you agree with his merger and no-merger price targets, it is clear that Binder is leaving that decision up to the investor. Thus, the only thing that Binder is really "guilty" of is not being ready to make a more committed call on the merger, and playing it safe. In reality, what analyst really can do that at this point. Yes, some are as high as 70% chance for approval, and BOA has the odds at 30%, but the majority sit in the middle (50% to 60% odds of approval).
So there you have it. Binders analysis and targets. Now it is up to you to make the call. You can see excerpts from the UBS reports on Sirius and XM in the Sirius Buzz Forums. Why not stop in and add your opinion.
Tyler Savery Position - Long Sirius, Long XM