Sirius XM Hitting New High’s – What Will Analysts Do?
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
Spencer,
What is your new fair value assessment of where the stock should be today – 1.30 , 1.35 ?
This company is performing better than ever has. How can we get this thing back up to the pre-merger value. We are roughly valued at 11.8 billion vs 13.5 billion pre-merger. This company has showed very good growth over the last year and continues to execute. All of the analysis are being very conservative in my opinion and banks is ridiculous with his evaluation of this company. In my opinion this company should be valued around 16 to 17 billion today.
I’m a new SIRI investor since early this year so i’ve realized some nice gains already. SIRI i believe earned .01/share or .00 in the past couple of quarters. I’m new to financial analysis, so my question is the following for anyone that may have a better grip on the numbers than i do…
EPS is net earnings divided by outstanding shares, correct? Or something close to that? So with 3.9 billion outstanding shares, that means every $100 million in net earnings would equal 2 1/2 cents a share, right? And if there were earnings net earnings of $390 million, .10 cents a share? Please correct me if i’m wrong.
The EBITDA for last year was about $700 million and I would expect that number to grow this year if Mel is doing everything right. With interest costs declining with the renegotiation or sale of debt, aren’t we going to get to $1 billion in EBITA real soon and won’t that easily take us up towards $300-$400 million in net earnings, giving SIRI a EPS of .10 cents instead of .00 or .01 or .02?
With the synergies and lower CapEx coming up, isn’t it possible that within the next 18 months or so that we could hit .10-.20/share, making a $3-$5 share price very possible and probable?
Any thoughts? As i said i’m a novice and don’t know if i’m off on any of the info above. Thanks for any help and go SIRI!