By Gino Lattarulo
Last week Maxim Group initiated coverage of Sirius / XM (NASDAQ:SIRI) with a “buy” rating and a 1.40 price target. It appears that most analysts share Maxim’s upbeat opinion — Reporting site Zacks shows four “strong buys,” two “holds” and zero “sells”. Hedge Fund mogul George Soros got in on the action as well by purchasing 29 million convertible notes ( valued at 28 million). With 5.6% of SIRI’s float being short interest I think that some squeezing will begin to take effect in the near future as the bearish trades begin to unwind.
For Sirius, the real confidence comes not only from its debt issue being resolved by Liberty Media, but from increased subscriber sales fueled by the ever important auto sector which is once again experiencing growth. Ford (NYSE:F) , Toyota (NYSE:TM), Honda (NYSE:HMC), and the newly minted GM have all reported solid quarterly numbers with encouraging forward guidance.
The satellite radio subscriber base at the end of the second quarter was 19.5 million which is an increase of 6% over 2009. Sirius expects to add another 1.1 million subscribers by the end of 2010, has generated higher average revenue per user, and lowered costs to help fuel net profit. Subscribers paid $11.81 per month (11 % from the same quarter in 2009) due to demand for the “Best Of” programming. These strong results also show that the negative impact from free services may not be as high as expected as the company reiterated its annual estimates of $2.8 billion in revenue. It was the third straight quarter that Sirius reported better than expected results.
These statistics are all supported by SIRI’s chart action maintaining its $1.00 support level during a period in which the major indexes are experiencing near “Death Cross” action. The Death Cross, for those who are scratching their heads, is a technician’s term for a chart movement in which the 50-day simple moving average crosses below the 200-day simple moving average. Technicians claim that this pattern confirms the change in trend where the price ultimately moves to a lower level.
Things seem to be continuing in the right direction for a stock that has risen from the ashes of near bankruptcy and continual scrutiny. Let us also not forget the manipulation from terrestrial radio during the merger tragedy, and the politicians who were in their pocket. Here are a few articles I wrote during that time. Enjoy.
July 8, 2008 Article **** July 18, 2008 Article **** July 25, 2008 Article
Position: Long SIRI
you folks publish helpful, upbeat articles …with ‘substantial’ information ….thanks – i am herein requesting someone of you folks address the seeming lack of any real insider buying, and what that implies about the ‘fair’ value of SIRI …or conversely, what it doesnt mean
good question above about insider buying or lack thereof…and I wouldn’t chalk it all up to them being issued sh*t tons of shares in the last 2 years. In fact, all there have been lately is sells..(i could be wrong there, but it really seems like it:))
Does anyone else feel that the rubbers gonna meet the road with this company when Howard says what his plans are come contract time?? If he resigns (which I feel he will, I WHISH for 5 years), and he signs say a 5 year deal…goes on a promotional blitz, they cross promote, positive articels are written, confidence goes up etc..etc.. the stock goes to where it should be : around $1.50-1.80 pretty quickly. And then we start to gain value at the rate everyone expects
If he signs say 3 year or under with stipulations on future programming, less production (more days off, come in later)…and comes in and quickly starts yappin about “I can’t wait till this contract is up” the stock languishes in the $1.10-1.44 range….until there is an offer to take it private, sometime around the end of the FCC price freeze rule or shortly thereafter…. and we have to be happy with a say $1.50 – 2.00 buyout…
I LOVE Howard, and his shows have been incredible the past 6 months, without Artie he really stepped it up, the History of Howard Stern has been epic..especially the last 1 since that is what I grew up to…but, I CAN”T WAIT for the next 1..it’s should be insane..
Along with a piece of a VERIZON I-phone app.. and yessss I said Verizon I-phone..he should be happy as hell for a while..he doesn’t want to be the 7th highest paid media personality…1 or 2, that’s it!
I know it’s 95% speculation, but I don’t think I am way off base here….
To Comment #2, I ask, what if Howard does not re-sign with them for a new contract. What if he goes straight to the Internet a la Adam Carolla?
I don’t think he would go straight to internet..I think there would be a break of some sort. 6 months, to a year…then he would break the news in a highly publicized way, a lot of fanfare, and promise huge new things when it comes to mobile entertainment.
I also think it would hurt Sirius in a big way..not drastically right away, but it would have an overall HUGE negative impact on Sirius if not only he were to leave, but to leave and go into competion for paying listeners.
I’ve said all along to whoever I know that since I have had Sirius, and Howard was the deciding factor in my decision…after hearing him on Satellite, I would of GLADLY paid $3-$5 dollars more a month just for him…Ferrrall is a big bonus.
If and when he goes to internet, which I don’t think he is ready for that transition yet with the size of his production, IMO he could pull 4 million paying subs without much effort. Conservatively bringing in around 15,000,000…A MONTH.
Can someone please step up with an article explainign why the price NEVER goes anywhere? There is so much good news on this stock and yet it is stifled and cannot budge from 1.00. Is this purely manipulation? Does it even matter that a company is successful anymore? It seems to me that the price of the stick will be what THEY want it to be… I’d like to know who THEY are….
Thanks,
ErikTee