Satellite Radio Playground

By Demian Russian

James C. Goss

In a research note issued on the heels of Sirius XM Radio’s (NASDAQ:SIRI) Q4 earnings results, Barrington Research Associates Senior Investment Analyst covering the Media and Entertainment Industry, James C. Goss, reiterates his OUTPERFORM rating and $3.00 price target on the equity.

“Sirius XM Radio continues its progress in the key metrics that matter, including subscriber growth, conversion of trial subscribers to self pay, revenue generation, moderating SAC levels, EBITDA and Free Cash Flow improvement and improving financial leverage ratios. In addition, a first-ever price increase should raise ARPU over a span of a couple of years and the launch of Satellite Radio 2.0 is intended to jump start some new IP-driven services that should extend the appeal of the service to some additional potential customers while also potentially improving the value proposition for many existing customers.”

– James C. Goss, Barrington Research Associates Senior Investment Analyst

Goss refers to Sirius XM Radio’s reported fourth quarter net subscriber gain of 542,966 as being “nominally better-than-expected.” His estimate had been for 535,926. Sirius XM’s full-year 2011 net subscriber growth of 1,701,860 brought its total subscriber base to 21,892,824, which slightly beat Goss’ estimate for 21,885,784. Fourth quarter revenues of $785.7 million, up 6.5% year-over-year, came in slightly below his $793.1 million estimate. Full-year 2011 revenues amounted to $3,025 million, slightly below his $3,031 million estimate. While Sirius XM reported a 17% increase in full year 2011 EBITDA to $731 million, exceeding managements guidance for $715 million, full-year EBITDA came in a bit below Goss’ more aggressive $752 million estimate. Goss notes that Sirius XM management raised full-year 2012 EBITDA guidance to $875 million (indicating 20% growth), which exceeds his existing $867 million estimate. Read More