Can Sirius XM Radio Continue to Thrive?
The June SAAR (seasonally adjusted annual rate) and a Goldman Sachs consumer survey displayed strong Sirius XM Radio (NASDAQ:SIRI) growth.
Analyst Matthew Niknam believes the new data has two important implications for the company moving forward. ”June light vehicle SAAR of 16.0mn exceeded both GS (15.7mn) and Street forecasts, which we view positively for volume growth at Sirius XM. Notably, this marks the first time since 2008 that auto sales have touched the 16.0mn run-rate,” said Niknam.
He continued: ”Our Consumer team, in its recent quarterly survey of 2,000 US consumers, found that respondents reported robust levels of optimism, with ‘intent to spend’ reaching a new high in 2Q13, likely owing to ongoing jobs creation and the wealth effect from rising home and equity prices. Importantly, consumers indicated the most enthusiasm for spending on autos; the delta between autos and all other categories was significant.”
Another positive move for Sirius is its partnership with Ford Motor Co. (NYSE:F) to create the Sync AppLink. The new app will allow subscribers to access Sirius radio for the first time through Apple (NASDAQ:AAPL) and Android handsets. The app allows for buyers to switch between listening to different programs using voice-commands or built-in controls in Ford vehicles.
While investors haven’t been overly optimistic about Sirius XM Radio’s potential growth, the raw numbers seem to point out that they’ve been too pessimistic. Critics’ big concern that companies such as Google (NASDAQ:GOOG) or Pandora (NYSE:P) could disrupt Sirius’ profits with free service has not come to fruition — at least, not yet.
TuneIn – a free service offering talk radio, event broadcasts, and music — is another radio service gaining momentum. The question for a lot of onlookers is whether these free services will eventually begin to steal paid subscribers away from Sirius.
Shares for Sirius XM Radio closed at $3.44 on Friday and the stock has a 52-week range of $1.84-$3.63. Goldman Sachs has given Sirius XM Radio a Buy rating with a price target of $3.50.
Here’s what Wall Street Cheat Sheet’s Victor Mora has to say about Sirius XM Radio.