our own take has been a bit different, in part because SIRIUS XM did not peter-out when the stock hit $2.00. It went as high as $2.44 before softening up. Our larger concern is valuation, but the first admission out there that must be made is that SIRIUS XM is perhaps the King of Cult Stocks and cult stocks can trade in any direction regardless of logic and regardless of valuation or value.
Some boutique firm named Heffernan Capital started coverage as Buy with a $2.50 target yesterday per a Seeking Alpha note. Unfortunately, that is barely a new near-term high and 10% upside for a “buy rating” is not enough of an implied gain for a risk/reward trade in a cult stock like SIRIUS XM.
As a reminder, some are now expecting a share buyback in 2012 and a dividend thereafter. Of course, price hikes have to come first and the market will get to see if competition from Pandora is really able to challenge SIRIUS XM.
Of the analysts we have seen, this $2.75 target appears to be a ‘Street-high” objective price target.
JON C. OGG
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