SIRIUS XM Analysts Revisit A Magic Moment (SIRI)

SIRIUS XM Radio Inc. (NASDAQ: SIRI) is trading at higher prices compared to the first time around, but the stock finds itself after earnings in very much the same place it was in January.  Two analyst calls after this week’s earnings followed by three others could cause a repeat performance.  Maybe even on a larger scale.

It was in early January that we had a threesome run on SIRIUS XM.  A relatively small brokerage firm and research outfit called Wunderlich put a “Buy” rating on SIRIUS XM with a $1.00 price objective.  Shares closed up almost 5% that day and the stock was at $0.74 that day.  Around the same time came an S&P debt rating upgrade.  Even TheStreet.com was positive on SIRIUS at the time.  It was a perfect storm of two (or three) positive jolts for the stock.

Yesterday morning, S&P Equity Research raised the rating to “Buy” from “Hold.”  That is quite different from a debt rating upgrade, but it is a key upgrade nonetheless.  S&P’s Tuna Amobi has a $1.50 price objective based upon the higher guidance and stronger performance metrics.

This morning we have an upgrade from that firm Wunderlich again to “Buy” from “Hold” but the target is no longer that $1.00.  It is now $1.50, based upon the same metrics.

InvestorPlace.com called it “growth you can count on” as one feature of “7 Penny Stocks You Can Buy Now” just yesterday.  There is also a note from TheStreet.com from the live earnings blog showing that 87% of its polled readers called it a “buy” and it noted that 70% of those polled see the stock at $2.00 by the end of this year.  Bullish polls may actually be a counter-trend issue, but that will only be known in time.   And Schaeffer’s Investment Research noted just yesterday about how all of the short-covering could fuel more of a rally.

Mel Karmazin is no Steve Jobs.  Not even close.  There is one commonality here though.  Mel Seems to have been adopting Jobs’ method of under-promising and over-delivering.

SIRIUS XM shares are taking a breather this morning with a mere 0.5% drop to $1.06.  Trading volume is also light.  The stock was also at $1.01 before its earnings report.  What is interesting is that even during the peak of the selling in late June and the first part of July the worst price we saw was $0.90 and the lowest close was $0.93.  That implies that in a pinch we have only about 13% downside and nearly 50% upside if these two analysts got their call right again.

In the last 24-hour period we are sitting on 5 implied positives versus 3 in January when shares were at a lower price.  Generally speaking, a scenario of better than three-to-one in upside versus downside is a slam dunk.

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JON C. OGG