Sirius XM Gets Another Thumbs Up, Price Target Boost From Citigroup

Citigroup analyst Jason Bazinet restated his Buy rating on satellite radio company Sirius XM (NASDAQ:SIRI) on Wednesday, and upped his target price on the stock to $2.50 a share, from $2.20, said a Forbes report.

Bazinet says 2012 net subscriber growth could reach 1.5 million, topping management’s guidance of 1.3 million additions. The analyst argues that gross adds in particular should climb to 9.5 million from 8.7 million, as more trial customers commit and retail installations increase. However, he thinks deactivations could swell to 8.1 million from last year’s 7 million, as self-pay churn rises to 2.1 percent from 1.9 percent, Forbes said.

Bazinet raised his 2012 EPS forecast to 6 cents a share from 5 cents; for 2013, he’s staying with 8 cents and he upped it to 12 cents from 11 cents for 2014, Forbes reported.

“The market is currently valuing Sirius equity at a lofty 28x trailing (2011) free cash,” Bazinet writes. “Given significant ramp in free cash, we believe Sirius can grow into its valuation. In fact, we believe Sirius’ equity could appreciate 15 percent per year until 2015 despite a 50 percent cut in its free cash multiple from 28x FY11 free cash to 14x FY15 free cash.”

Here’s how shares of SIRI are trading now:

SIRIUS XM Radio Inc. (NASDAQ:SIRI): SIRI shares recently traded at $2.14, down $0.01, or 0.47%. They have traded in a 52-week range of $1.27 to $2.44. Volume today was 39,839,208 shares versus a 3-month average volume of 53,971,200 shares. The company’s trailing P/E is 30.57, while trailing earnings are $0.07 per share.

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