By Demian Russian
RBC Capital Markets Global Media Analyst David Bank issues a new research report weighing in on Sirius XM Radio’s (NASDAQ:SIRI) third quarter earnings results, maintaining his previous $2.00 price target and Sector Perform/Speculative Risk rating on the equity. While Bank describes Sirius XM’s third quarter results as being less than perfect, it’s the stock valuation as opposed to any operational issues which he says “keeps us on the sidelines.”
Sirius XM’s reported Q3 net subscriber additions of 334k came in below Bank’s estimate for 385k. According to Bank, the weakness in net sub adds lead to the company reporting higher EBITDA, as a result of the associated SAC (Subscriber Acquisition Costs) being lower. While net subscriber additions came in lower as a result of lower net promotional subs, Bank says, “Quite frankly, we aren’t sure why net promotional sub additions came in ~65k below our expectations.” He says that part of it may have been the result of a weaker U.S. auto sales SAAR during the summer months and a slowdown in the OEM production cycle in Asia, due to residual impact from the earthquake in Japan. While Bank reduced some of his full-year 2011 estimates slightly, he expects a bounce in the fourth quarter due to “solid OEM trends in 3Q11 sales and production.” Read More
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