Goldman Sachs Seriously Pans Sirius (SIRI, XMSR)

It seems that Goldman Sachs is sticking by its negative call in Sirius Satellite Radio (NASDAQ: SIRI), except that the call went from cautious to very negative in tone.  Goldman Sachs has added the stock to its CONVICTION SELL LIST. This is after the DOJ approval for its XM Satellite Radio (NASDAQ: XMSR) acquisition, and is actually even more so based on the approval as it says "the DOJ catalyst is behind us."

Goldman Sachs sees 30% downside to its $2.25 price target.  In short, Goldman sees several issues that are not reflected in the reality of today’s stock prices:

• sees lower cash flows;
• sees potential FCC conditions and issues on executing synergies;
• sees near-term liquidity hurdles;
• sees significant dilution, particularly if it is necessary to refinance the $1 Billion of XM’s putable debt.

Just last night, Jim Cramer stuck with his "$5 target" on Sirius Satellite Radio.  In the end, one will be right and one will be wrong. 

Jon C. Ogg
March 25, 2008

Jon Ogg produces the Special Situation Investing Newsletter and can be reached at [email protected]; he does not own securities in the companies he covers.