Bearish Report Sends SDARS Lower
Goldman Sachs analyst Mark Weinkes outlined a bearish situation for SDARS that sent both Sirius and XM plummeting lower on heavy volume. Weinkes, who has been bearish for quite some time went grizzly bearish. Both Sirius and XM had staved off previous anticipated Goldman lows now, but new price targets set even lower seem to have taken the feet right out from under satellite radio.
Weinkes established new price targets of $1.75 and $6.50 for Sirius and XM respectively. These new prices are down from $2.25 and $11.50. The new prices would give more implied room at the bottom than many previously anticipated, and the new lower targets could well have given short traders more confidence that a short position would pay off better than they previously had thought.
Goldman cites slowdowns in subscriber growth, debt refinancing, existing costs associated with debt, and a lower revenue per subscriber as some of the reasons for their latest thoughts on this sector. The lower price targets even with a merger are frustrating enough for longs, but a $1.00 stand alone price on Sirius shows that Weinkes is no fan of the satellite radio business model.
All of this transpires just as it appears that Sirius and XM may be on the verge of FCC approval of the license transfer, paving the way for the companies to merge. Goldman sits at the direct opposite end of the spectrum than Citigroup, which has much higher price targets for a merged company. So far it would appear that Goldman has a large audience listening to their analysis.
Position – Long Sirius, Long XM
It seems quite odd that with a stock price of about $2.40 with a merger not 100% certain, to predict a $1.75 price if the merger does go through. Isn’t it logical, that even if that “analyst” did not believe in the long-term future of satelite radio, that investors would at least give the stock price a bounce if the FCC voted positively on the merger, bringing the stock price HIGHER than $2.40? One if left to wonder at the intent of this “analyst.”
Thank you Goldman.
Your report today allowed me to average down quite nicely. Picked up a nice bit of XM shares at $8.55. When the merger is completed, I should have a nice healthy pile of stock in the combined company.
SatRad is here to stay, weather you beleive it or not.
What f*cking crooks. Nice timing… How is this legal… They are obviously short or all their clients are…
Do XM leaps convert to 4.6 times the siri leaps at adjusted strikes?
Hopefully, these sell offs are institutions cleaning up their balance sheets. They can blame the poor performance of their funds on the economy like everyone else. When the merger is approved and the stock is going the right way they’ll buy back in with a low cost average fund performance will increase and they can look like heroes,its all in the timing.
Can anyone answer my option conversion question?
I here yea Newman, I love this. Even if the merger does not go through I can wait. I just have to worry about a bankruptcy.
Tyler call that fool up and tell him to read your in depth analysis how the XM quarter was better than it looked.
SiriusIntentions… dowload this PDF file from the CBOE. It should be able to answer your questions. In it, they explain how they’re going to convert XM options/LEAPS.
Thanks homer I couldn’t find the CBOE document when I looked.