JP Morgan upgraded both Sirius (SIRI) and XM (XMSR) saying that both could have close to 15 million subscribers by 2010. The research note also indicated that most cars may have one of the services pre-installed within the next few years. Oddly enough, Bank of America downgraded XM saying the stock might not move above $19 in a merger with SIRI.

After trading at $4.10 the previous day, the upgrade only moved Sirius to a close of $4.15. XM, which had traded at $17.12 before the analyst calls, closed at $17.11 the days that the research notes were released.

No amount of good news seems to move the stocks. That includes recent statements about year-end subscriber figures and forecasts of positive cash flow in Q4. Both stocks have rallied slightly, but are still far below their 52-week highs.

More than one analyst has made the case the Sirius is worth less than its current price. Morningstar has a "fair value estimate" of  $1.50 on the stock, even assuming that it sales increase 53% a year over the next five years. Thomson/First Call has price target for Sirius from 18 analysts. These range as low as $3.50, well below the current share price.

XM also may not be worth more than the current stock price. Some analysis puts the value of the company at $18. Morningstar’s "fair value estimate" for XMSR is $12. The low end of the range of price from 17 brokers surveyed by Thomson/First Call is $11.

Most valuations of the two companies now take into account a potential merger of the companies which could save hundreds of millions of dollars. This might well make the combined entity profitable and help pay down the large debt load from both companies. But, there is concern that the Justice Department and FCC might block such a deal.

If the merger does not come about, the stock may well fall as concerns continue that operating results cannot out-race debt service.

A lot of good news and stock prices that are still low. Perhaps the companies are worth less than the market’s hope for them.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

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