By Demian Russian
Barrington Research Associates Senior Investment Analyst covering the Media and Entertainment Industry, James C. Goss, weighs in on Sirius XM Radio Inc. (NASDAQ:SIRI) heading into 2013 with a newly issued research report and an exclusive interview with Playgound Radio tonight at 8:00 PM ET.
Return of investor focus to the promising fundamental story features strong subscriber growth, excellent cost controls, the royalty settlement and improving finances. Mr. Karmazin’s exit should not derail momentum.
– James C. Goss, Senior Analyst, Barrington Research Associates
Last year, Sirius XM Radio (SIRI) hit Goss’ 2012-based price target of $3.00 to the penny. For 2013, Goss reaffirms his OUTPERFORM rating on the equity and sets a new 2013-based price target of $3.75. Goss cites Sirius XM’s continuing improvements in EBITDA and FCF generation as key drivers behind his outlook for 2013.
Goss views the recent Copyright Royalty Board (CRB) ruling, which set royalty rates for Sirius XM Radio out through 2017, removing uncertainty in the market and being “quite manageable” for the company — especially in light of what SoundExchange had be arguing for. While the CRB raised Sirius XM’s royalty rate from 8% to 9% of gross revenues for 2013, with subsequent half a percent increases annually bringing the rate to 11% in 2017, Goss notes that, as things stand now at the current royalty rate, Sirius XM’s effective rate is actually somewhat less due to some exclusions, such as revenues from data services, equipment sales and other such categories.
Barrington Research Associates Senior Investment Analyst James C. Goss will be the special guest on Playgound Radio tonight at 8:00 PM ET.
Disclosure: Long SIRI
Contact the author: DemianRussian@SatelliteRadioPlayground.com