Media
After Upgrade and Debt Sale, Should SIRIUS XM Be Hitting New 52-Week Highs?
Published:
Last Updated:
Two things happened, and speculation about another development are all aiding the stock. The company’s plan to sell $400 million in senior notes will allow SIRIUS XM to repay or repurchase senior debt maturities coming due in 2013. Moody’s raised Sirius’ credit rating after the refinancing transaction announcement and also a day after its earnings, but the ‘B1’ rating from a ‘B2’ rating is still deep in junk-bond territory.
After good earnings and a raise in guidance for 2012, investors believe that SIRIUS XM can keep growing and growing. As long as new cars keep selling in the U.S. that may turn out to be true as the fleet is still rather old if you look on a historical basis.
Another issue besides the earnings is that the Liberty Media Corporation (NASDAQ: LMCA) proposed spin-off of Starz is giving hope that a Liberty deal could be reached. What is interesting is that the hope seems to be that this will be a friendly deal. If you know John Malone, you know he aims for tax efficiency in all cases. If Malone somehow gets more than 50% of the formal voting rights, he will have control rather than a state of ‘de facto control’ as he was seeking previously. That would allow for Liberty to distribute those shares in a what may be a tax-free spin-off to its shareholders. The problem that should be considered here is what you think will happen if several billion new shares are sent out to thousands and thousands of shareholders all at once on a tax-free basis. That might bring a “Sell, Mortimer!” situation.
SIRIUS XM shares are up over 7% at $2.48 and the new adjust 52-week trading range is $1.27 to $2.41. Be advised that the consensus analyst price target is $2.60 on SIRIUS XM.
JON C. OGG
Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply
clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.