How Analysts View Sirius XM Upside Now, After Earnings

S&P Capital IQ maintained a Hold rating on Sirius XM while trimming its 12-month target price by $0.50, from $4.50 down to $4.00. That represents a price-to-sales ratio of about of 4.2, versus its own expected 2016 estimate. S&P also noted that Sirius XM still has close to $4.8 billion in carry-forward net operating losses (NOLs) to go through before it has to worry about the taxes coming into play for earnings and EBITDA. With added content and other costs (including Howard Stern’s new pact), S&P trimmed its 2016 earnings estimate by $0.02 to $0.14 per share and set 2017 at $0.18 per share.

Deutsche Bank kept its Hold rating but lowered its price target to $4.25 from $4.50.

RBC Capital Markets maintained its Sector Perform rating but lowered its price target to $4.25 from $4.50.

Sirius XM offered its full 2016 guidance to grow subscribers, revenue, adjusted EBITDA and free cash flow. This is as follows:

  • Net subscriber additions of approximately 1.4 million (from a year-end base of approximately 29.6 million)
  • Revenue of approximately $4.9 billion (from $4.6 billion in 2015)
  • Adjusted EBITDA of approximately $1.78 billion (from $1.66 billion in 2015)
  • Free cash flow of approximately $1.4 billion

It turns out that the $3.42 share price for Sirius XM on Friday’s close was down about 7.6% from the $3.72 price the prior Friday, but was down even a tad more from the $3.72 closing price on Monday. Sirius XM also has seen its shares fall down to 16% from the $4.07 closing price at the end of 2015.

Analysts have a consensus price target of $4.55, with the highest analyst target still registering up at $5.25. One consideration here is that the lowest analyst target price is now $3.75, which represents almost 10% in potential upside to the least bullish of all analyst targets. The stock has a 52-week trading range of $3.21 to $4.20.

Sirius XM also still cannot shake having a large short interest. Its past and its low share price make the company a favorite among active traders, bulls and bears alike. Its mid-January short interest was 145.5 million shares. That sounds massive, but its 2015 peak was just above 160 million shares short, and it is in the middle of a range when you consider that the 2015 lowest short interest reading was about 130 million shares.

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