SIRIUS Defended at S&P, Sort Of (SIRI, XMSR)

S&P is actually out discussing the SIRIUS Satellite Radio (SIRI-NASDAQ) as having Improving metrics inside its core operations.  While it says the company is giving cautious guidance (conservative), it still sees 22% upside in the SIRI stock from current levels.  The report does signal regulatory concerns regarding the XMSR merger.  Below is the full summary of S&P’s research note:

After pre-announced net subscriber additions of 905,000, Sirius posted a fourth quarter loss per share of 17 cents vs. a 23-cent loss one year earlier, 3 cents and 2 cents narrower than S&P and Street views. Except for churn and retail slowdown, we see improving metrics, including subscriber acquisition costs, average revenue per user and auto OEM gains. Sirius guides, in our view, cautious 2007 2 million net adds, with $1 billion total revenues (vs. 2006’s $637 million), 2.2%-2.4% churn (vs. 1.9%) and $95 acquisition cost per subscriber (vs. $114). We are cautious on regulatory outlook for pending merger with XM Satellite Radio (XMSR) and are keeping our target price of $4.50 on relative enterprise value/sales.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at [email protected]; he does not own securities in the companies he covers.