By Demian Russian
James C. Goss
On the heels of Sirius XM Radio’s (NASDAQ:SIRI) 2010 Q4 results, Barrington Research Associates Senior Investment Analyst covering the media and entertainment industry, James C. Goss, reiterates his OUTPERFORM rating and raises his price target from $1.85 to $2.40. In addition, he also moved his quality rating on the Satellite Radio service provider from Speculative to Aggressive. Goss saw aggressive cost control and top-line performance driving the company’s Q4 and full-year 2010 results.
Sirius XM ended fiscal 2010 with continued strength as it builds on the positive momentum that has been established over the past two years.
– James C. Goss, Barrington Research Associates
While Sirius XM’s fourth quarter operational and financial results had met all of his “key objectives,” Goss noted in his report that the EPS figure was “the only major metric that did not come fairly close to our estimate.” He explains that Sirius XM’s fourth quarter reported EPS of $(0.02) was a result of an impairment charge associated with a satellite write-down and one-time charges related to the early extinguishment of debt. “Management continues its process of taking out older higher cost secured debt issues in favor of lower cost unsecured offerings,” Goss noted.
Sirius XM’s reported EBITDA results of $144 million for the fourth quarter and $626 million for full-year 2010 slightly beat Goss’ estimates of $132 million for the quarter and $614 million for the year. Goss sees Sirius XM’s increasing of FCF (Free Cash Flow) year-over-year as “part of a pattern” which will allow the company to continue to restructure its financial position. Goss noted that the company’s ability to generate FCF will benefit from “declining capital expenditures as the satellite program nears its completion for at least a several year period.”
While Goss said that Sirius XM management’s 2011 guidance for 1.4 million net subscriber additions and $3 billion in revenue were close to his estimates, he notes that his EBITDA estimate of $725 million is slightly higher than management’s forecast for $715 million. Goss moves his price target from $1.85 to $2.40 using an EV/EBITDA valuation method, placing the multiple in the middle of his projected EBITDA growth range.”We feel the momentum being established in earnings, EBITDA growth and improvement in financial position justify an additional bump in our target multiple,” Goss said.
Barrington Research Associates Senior Investment Analyst James C. Goss will be the special guest on Playground Radio for an exclusive, live interview on Wednesday, February 23rd, 2011 at 8:00PM ET.
Disclosure: Long SIRI
Contact the author: DemianRussian@SatelliteRadioPlayground.com
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Any other stock would be on a tear right now with all these upgrades. Why is SIRI stuck in the mud?
Because the shorter’s love this stock. There’s more money made shorting a stock. It’s the name of the game. Manipulation at it’s finest.
Shorting is not manipulation.
Naked shorting IS.
See you at $2.00 next month.
reduce debt, then reduce shares outstanding—The shorts will wither away